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Kajian Pendanaan Public untuk Air Minum dan Sanitasi di by morgossi7a2

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									FINANCIAL     STUDY



Kajian Pendanaan Public
untuk Air Minum dan Sanitasi
di Indonesia
Review of Public Financing for Water
Supply and Sanitation in Indonesia




                        December 2006
             Latar Belakang
           Background Report

Kajian Mengenai Pendanaan Publik untuk
   Air Minum dan Sanitasi di Indonesia

Review of Water Supply and Sanitation
        Financing in Indonesia


            December 2006




                                         Financing Study Report |   i
                                  Abbreviations and Acronyms

   ABT                        Anggaran Belanja Tambahan/ Additional expenditure budget
   AMPL/WSES                  Air minum dan penyehatan lingkungan/Water supply and
                              environmental sanitation
   APBD                       Anggaran Pendapatan dan Belanja Daerah/ local budget
   APBN                       Anggaran Pendapatan dan Belanja Negara/ state budget
   Bappenas                   Badan Perencanaan Pembangunan Nasional/ National Development
                              Planning Agency
   Bappeda                    Badan Perencanaan Pembangunan Daerah/ Local Development
                              Planning Agency
   BUMDs                      Badan Usaha Milik Daerah/ Local Government-Owned Enterprises
   DAK                        Dana alokasi khusus/ special allocation fund
   DAU                        Dana alokasi umum/ general allocation fund
   DD                         Dana Dekonsentrasi/ ”Deconcentration” Funds
   DSCR                       Debt Service Coverage Ratio
   DTP                        Dana Tugas Perbantuan/ Co-Administration Funds
   GDP                        Gross domestic product
   GOI                        Government of Indonesia
   GRDP                       Gross regional domestic product
   IDR                        Indonesian rupiah
   IEC                        Information, education and communication
   IPAL                       Instalasi Pengolahan Air Limbah/ Wastewater Treatment Unit
   IPLT                       Instalasi Pengolahan Limbah Terpadu/Integrated Sludge Treatment
                              Unit
   MCK                        Mandi cuci kakus/ public toilets
   MDGs                       Millennium Development Goals
   MoF                        Ministry of Finance
   MoH                        Ministry of Health
   MTEF                       Medium-Term Expenditure Framework
   NAPs                       National Action Plans
   PAD                        Pendapatan asli daerah/ local own revenue
   PDAMs                      Perusahaan Daerah Air Minum/ Local Government-Owned Water
                              Utilities
   PP                         Peraturan Pemerintah/ Government Regulation
   PKPSBBM                    Program Kompensasi Pemberian Subsidi Bahan Bakar Minyak/
                              Oil Subsidy Compensation Program
   PU                         Pekerjaan Umum/ Ministry of Public Works
   RKN                        Rencana Kerja Nasional/ National Work Plan
   RPJMN                      Rencana Pembangunan Jangka Menengah Nasional/ National
                              Medium-Term Development Plan
   UPP                        Urban Poverty Project
   WASPOLA                    Water and Sanitation Policy Action Planning Project
   WSLIC                      Water Supply for Low-Income Communities Project
   WSP-EAP                    Water and Sanitation Program—East Asia and the Pacific
   WSS                        Water supply and sanitation




ii | Financing Study Report
                          Information and Acknowledgment




Air Minum dan Penyehatan Lingkungan
Kelompok Kerja
Jl. Cianjur No. 4, Menteng, Jakarta
Indonesia
Telephone: +6221 314 2046

Water and Sanitation Program – East Asia and the Pacific (WSP-EAP)
The World Bank
Jakarta Stock Exchange Building Tower II
Jl. Jend. Sudirman, Kav. 52-53
Jakarta, Indonesia
Telephone: +6221 5299 3003

December 2006

This study was supported by a WSS Finance Study Team from the Government of Indonesia (GoI)
that includes: Oswar Mungkasa, Andre Kuncoroyekti, Rahmat Satria (Bappenas); Fadliya, Denny
Kurniawan, Sidik Budiman, Wendy Julianti, Baharuddin Abubakar, and Wawan Sunarjo (Ministry of
Finance), Hotman Pandiangan, Deka Paranoan, Luky RA and Dian Suci (Ministry of Public Works),
Djoko Wartono and Zainal (Ministry of Health), Rheidda Pambudhi and Eko Subowo (Ministry of
Home Affairs), Mohammad Helmy and Zulkarnain (Ministry of Environment).

The report was written by Brian Smith and Jemima Sy based on research conducted with Bambang
Widjajarso, Andy Hamzah, Kodirin and Akhmad Priharjanto. Assistance was provided by Dormaringan
Saragih, Irvan Tjondronegoro, Yosa Yuliarsa and Nuri Yusnita.

Peer reviews and other information were provided by: Russell Abrams, Meltem Aran, Andre Bald,
Isabel Blackett, Werner Brenner, Jan Drozdz, Leila Elvas, Chris Heymans, Sofyan Iskandar, Katharina
Gassner, Alfred Lambertus, Blane Lewis, Nilanjana Mukherjee, Andre Oosterman, Mike Ponsonby,
Deviariandy Setiawan, Bambang Suharnoko, Risyana Sukarma, Gary Swisher, James Woodcock,
Kameel Virjee and Bastian Zaini.




                                                                              Financing Study Report |   iii
                                  Table of Contents
Abbreviation and Acronyms                                                               ii
Information and Acknowledgment                                                          iii
Table of Contents                                                                       iv
Report Summary in Indonesia                                                             v
1.     Introduction                                                                     1
        1.1. Objective of the Study                                                     2
        1.2. Study Scope, Method and Limitations                                        2
        1.2.1. Sector Focus                                                             2
        1.2.2. Institutional Focus                                                      2
        1.2.3. Budget Reviews                                                           2
        1.2.4. Other Reviews                                                            3
2.     Sector Background                                                                3
        2.1.   Position at Decentralization                                             4
        2.2.   Position Post-Decentralization                                           5
3.     Institutional Context                                                            5
        3.1.   National Level                                                           8
        3.2.   Local Level                                                              8
4.     National Water Supply and Sanitation Strategies                                  9
5.     Financial Policies                                                               11
        5.1.   Public Financing for Water Supply and Sanitation                         11
        5.1.1. Budget allocations by national government agencies                       11
        5.1.2. Budget allocations by local governments                                  12
        5.1.3. Loans by national government granted to local government agencies        12
        5.1.4. Loans by local government agencies                                       13
        5.1.5. Other sources from national government revenues                          13
        5.2.   Public Financial Planning and Budgeting Policies                         14
6.     Budget Trends for Water Supply and Environmental Sanitation (WSES) 2003-2005     17
        6.1.   Local Investment in Water Supply and Environmental Sanitation            17
        6.2.   National Investment in Water Supply and Environmental Sanitation         19
        6.2.1. WSES Allocations from the Ministry of Public Works                       19
        6.2.2. WSES Allocations from the Ministry of Health                             20
        6.3.   National and Local Government Support to PDAMs                           21
7.     Conclusions                                                                      21
8.     Next Steps on Finance Strategy                                                   25
Annexes
Annex 1                                                                                 26
Annex 2                                                                                 27
Annex 3                                                                                 29
Appendices
Table 16 Total Local Budget Allocations for Water Supply and Sanitation                 32
Table 17 Local Budget Allocation for Water Supply and Environmental Sanitation Sector
           – Capital and Operational Expenditure                                        33
Table 18 Local Budget Allocation for WSS – Physical and Non-Physical Activities         34
Table 19 Local Budget – Total Revenues and Expenditure                                  35
Figure 8 Districts Ranked by Total WSES Investment (2003-2005)                          36
Figure 9 Districts Ranked by WSES Per K (2003-2005)                                     36
Figure 10 Provinces Ranked by WSES Per K (2003-2005)                                    37
Figure 11 Provinces Ranked by Ave Per K (2003-2005)                                     37
Table 20 Ministry of Public Works WSES Allocation by Type                               38



iv | Financing Study Report
Latar Belakang

Kajian Mengenai Pendanaan Publik untuk Air Minum
dan Sanitasi di Indonesia




Ringkasan Laporan                                       Dukungan dan pemeliharaan proyek dan iv. Sos-
                                                        ialisasi kebijakan atau pembangunan kapasitas.
Pendahuluan dan Tujuan                                  Perbandingan dan korelasi alokasi anggaran di
Dibutuhkan kemampuan untuk memperkirakan                dalam dan antar tingkatan pemerintah dan jenis
dan mengalokasikan sumber daya secara ra-               kegiatan juga dilakukan.
sional dalam upaya penyediaan layanan air mi-
num dan penyehatan lingkungan (AMPL) yang               Latar Belakang Sektor
berkelanjutan. Pemerintah Republik Indonesia,
melalui Kelompok Kerja Air Minum dan Pe-                    Tabel 1. Pengeluaran Tahunan Rata-Rata dalam
nyehatan Lingkungan (AMPL), membutuhkan                                         Pembangunan Sektor Air
kajian pendanaan ini untuk memperoleh gam-                                          Average              Average           Average
                                                                                  (1994-97) in        (1998-2000) in    (2001-2002) in
baran dasar yang lebih baik bagi pengemban-                   Level of             Billion Rp           Billion Rp        Billion Rp
                                                            Government
gan strategi pendanaan di sektor ini. Studi ini                                   Historical            Post Crisis         Under
                                                                                                                        Decentralization
memberikan gambaran besaran dan kualitas in-             Central                               842            1,450.8            1,985.0
vestasi yang telah dilakukan pada sektor AMPL
                                                         Province                                55             106.0             284.6
di era desentralisasi sebagai sarana memahami
permasalahan-permasalahan mendasar terkait               Districts and Cities                    29               538             335.5

dengan kesenjangan dalam pendanaan sektor.               Total                                 926            1,610.5            2,605.3


                                                         As percent of GDP*               0.23%                0.40%             0.64%
Cakupan Studi
                                                        * 2000 Constant Prices:
Studi ini meneliti pendanaan publik dalam pen-          Analyzed from Sistem Informasi Keuangan Daerah and MoF Data

goperasian dan investasi pada sektor AMPL
pasca-desentralisasi, yaitu 2003-2005. Kajian ini       Sebelum desentralisasi, departemen-departe-
menganalisis alokasi dana yang dilakukan oleh           men tingkat pusat memiliki kewenangan besar
Departemen Kesehatan dan Departemen Peker-              untuk merencanakan, mengembangkan dan
jaan Umum pada tingkat pusat, dan pada tujuh            mendanai prasarana pada sektor ini, sementara
propinsi, dua kota dan 19 kabupaten yang ber-           pengoperasian dan pemeliharaan umumnya dis-
partisipasi pada proyek Water Supply and Sani-          erahkan oleh pemerintah pusat kepada pemer-
tation Policy Action Planning (WASPOLA).                intah daerah. Oleh karena itu, tidak mengher-
                                                        ankan jika 90 persen pengeluaran pemerintah
Dokumen-dokumen anggaran juga dianalisa, na-            pusat adalah untuk investasi kapital. Rata-rata
mun data mengenai pengeluaran ternyata tidak            pengeluaran untuk sektor air pada dua tahun
mencukupi, laporan ini hanya akan memfokus-             pertama setelah desentralisasi mengalami kenai-
kan pada alokasi anggaran. Komposisi alokasi            kan sebesar 60 persen di atas rata-rata historis
sektor dianalisa dengan memverifikasi butir-butir        pasca-krisis. Sementara pengeluaran meningkat
anggaran terhadap dokumen-dokumen pendu-                baik di tingkat pusat maupun daerah, pengeluar-
kung untuk menentukan validitas kegiatan/ke-            an pemerintah daerah (propinsi dan kabupaten)
luaran. Alokasi-alokasi tersebut lalu diklasifika-       meningkat hampir tiga kali lipat dan pengeluar-
sikan berdasarkan sub-sektor berdasarkan jenis          an pemerintah kabupaten meningkat enam kali
kegiatan/keluaran: i. Fisik, ii. Bantuan teknis, iii.   lipat.




                                                                                                        Financing Study Report |           v
Konteks Kelembagaan                                                   Tabel 2. GOI Water Supply Targets
Saat ini beragam aktor dari berbagai institusi ter-
                                                          Water Supply Access* Targets                   RPJMN 2009   NAP 2010   NAP 2015
libat dalam kegiatan pembangunan di sektor ini.
Pada tingkat pusat, lebih dari 20 direktorat dari 8     Urban                                                  66%        90%        93%

                                                        Rural                                                  30%     70.75%      77.50%
departemen/kementerian terlibat dalam penye-
                                                        Total                                                  66%        83%        88%
diaan air dan sanitasi, sementara pada tingkat          Service Level Target of Projected Total Access
lokal, terdapat 9 unit yang berbeda, di mana se-         Piped water                                           40%     48.50%        62%

tiap kabupaten memiliki antara 2 sampai 4 unit,          Others                                                60%     51.50%        38%

namun tidak ada koordinasi antar organisasi ini.        Operational Targets

Hubungan antar lembaga pemerintahan yang                 No. of households connected (millions)                          19.00      25.40

                                                         Productions capacity (‘000 liters per sec)                     268.00     358.00
tidak terkoordinir dengan baik inilah yang mem-
bentuk praktik-praktik pendanaan negara pada          * Refers to piped and non-piped systems


sektor ini, dengan beragamnya unit-unit angga-
ran yang menggunakan sejumlah skema berbe-
da dalam penyaluran dana, dan mencerminkan                                Tabel 3. GOI Sanitation Targets
prioritas yang paralel.
                                                      Sanitation & Wastewater Access Targets RPJMN 2009               NAP 2010   NAP 2015


Mandat pada tingkat nasional berfokus pada              Sanitation Targets

                                                        Urban                                                          73.74%      71.39%
pembuatan kebijakan, bantuan teknis, pemban-
                                                        Rural                                                          64.50%      78.82%
gunan kapasitas dan sosialisasi dan promosi             Total                                                             69%      75.34%
kebijakan. Namun temuan studi ini menunjukkan           Operational Targets
bahwa tidak cukup banyak sumberdaya yang                  Open defecation free*                               100%       100%       100%

dialokasikan untuk memenuhi mandat ini. Pada              IPLT and IPAL Use Capacity                           60%        60%

tingkat daerah, terlepas dari banyaknya pelaku,           Reduce Domestic Water Pollution                      50%        50%

beberapa mandat masih belum memiliki kerang-          * Households at least have a latrine as safe disposal for human waste

ka kelembagaan yang jelas, dan hal ini mencer-
minkan rendahnya prioritas untuk sektor ini.          Selain untuk pembuangan yang aman bagi lim-
                                                      bah manusia (sanitasi), RKN mengenai air limbah
Tantangan di bidang koordinasi dan pencapaian         juga bertujuan untuk mengembangkan sistem
kejelasan peran setiap institusi tidaklah ringan      sewerage terpusat untuk kota metropolitan dan
karena kerancuan dalam pembagian fungsi               wilayah perkotaan besar lainnya.
antar institusi menurunkan akuntabilitas insti-
tusi-institusi di tingkat daerah. Akar dari semua     Berbagai dokumen strategi Pemerintah mene-
permasalahan itu adalah kurangnya komitmen            tapkan satu paket prinsip dan kegiatan yang
institusi-institusi tersebut terhadap berbagai        konsisten yang dapat menjadi landasan prioritas
area program dan peran yang menjadi tanggung          bersama sektor ini atau program kerja utama.
jawab mereka.                                         Namun, proses pengembangan strategi belum
                                                      selesai. Kedua paket dokumen tersebut masih
Strategi Nasional AMPL                                belum jelas dalam mendefinisikan layanan mini-
Arahan Pemerintah Indonesia untuk sektor              mum yang menjadi prioritas, paket program re-
AMPL tercantum dalam Rencana Pemban-                  formasi, serta mengenai pembagian tanggung-
gunan Jangka Menengah Nasional - RPJMN,               jawab. Beberapa area strategis memerlukan
2004-2009, dan sebelumnya, dalam Rencana              pengembangan lebih lanjut.
Kerja Nasional (RKN) untuk Penyediaan AMPL
yang dikembangkan oleh Departemen Pekerjaan           Untuk menyelesaikan pengembangan strategi
Umum - PU. Baik RPJMN maupun RKN pada                 tersebut, pemerintah dapat mempertimbangkan
dasarnya dirancang untuk mencapai target Tu-          untuk menyepakati tingkat minimum penyediaan
juan Pembangunan Milenium (MDG) Indonesia             layanan bagi semua penduduk Indonesia dan
pada tahun 2015.                                      memprioritaskan satu paket reformasi tertentu.
                                                      Proses ini dapat meningkatkan dampak kegiatan



vi | Financing Study Report
karena mampu untuk mengkonsolodasikan upa-                                             tentu selama periode tertentu. Pendanaan pub-
ya-upaya berbagai institusi yang terlibat. Beran-                                      lik, terutama transfer dari tingkatan pemerintah
jak dari kesepakatan ini, rencana investasi sektor                                     yang lebih tinggi ke tingkatan pemerintah yang
dapat dikembangkan, dan dari sini akan terdefi-                                         lebih rendah, dapat dilakukan untuk menunjang
nisikan apa dan bagaimana sumber dana akan                                             kegiatan-kegiatan yang menjadi prioritas ini.
dialokasikan untuk mencapai target-target ter-

                                                    Tabel 3.
          Wilayah-Wilayah Strategis yang Tercantum dalam Rencana Penyediaan Air dan Sanitasi Nasional

                                                         RPJMN                                 NAP Water Supply                            NAP Wastewater

 1. Sector Policy and Planning                                                                                                  Strengthen coordination with other sectors

 2. Infrastructure Development and
    Rehabilitation
 2.1. New Infrastructure Develop-         Increase number of PDAMs and PDALs         Develop water supply facilities incre-     Expand coverage of existing wastewa-
       ment                               in metropolitan and big cities             mentally                                   ter facilities and infrastructure
                                          Increase service connections, particu-     Support increased service connec-          Implement program for domestic IPAL
                                          larly for villages                         tions especially in rural and peri-urban   development
                                          Increase sewerage connections              communities                                Support infrastructure development in
                                                                                                                                disease-endemic areas
                                                                                                                                Develop infrastructure in disaster areas
                                                                                                                                Develop appropriate infrastructure in
                                                                                                                                remote areas and small islands
                                                                                                                                Develop infrastructure in border areas

 2.2. Rehabilitation of Existing Infra-   Rehabilitate infrastructure destroyed by                                              Rehabilitate existing wastewater facili-
      structure                           natural calamities                                                                    ties and infrastructure
                                          Refurbish water and wastewater
                                          systems built
                                          Replace old trunk and distribution
                                          pipes

 3. Tehnical Assistance to Support
     Program/Project Implementation
 3.1. Develop Pro-Poor Approaches         Ensure participation of communities in                                                Develop wastewater infrastructure for
       to Infrastructure Development      planning, design and construction                                                     low-income community
 3.2. Technology Research and             Improve technology for sewage                                                         Develop program for environmentally-
       Development                        processing                                                                            friendly technology for wastewater
                                                                                                                                management

 4. Performance Improvement of
     Service Providers (Institutionally
     and Community Managed)
 4.1. Operational Efficiency               Implement leakage reduction program.       Improve quality of drinking water          Assist increased performance of
                                          Optimize idle capacity of water and        distributed                                wastewater infrastructure and facilities
                                          wastewater facilities

 4.2. Service Provider Capacity           Support improved human resources           Support continuing training for PDAM       Improve competence of human
                                          management of service providers            management                                 resources
                                          Revise regulation of local government      Establish separate supervision body
                                          enterprises                                from operations
                                          Support capacity-building programs for
                                          community-based service providers

 4.3. Debt Restructuring                  Implement debt restructuring program       Implement debt restructuring program
                                          for PDAMs.                                 for PDAMs
                                                                                     Encourage local governments to con-
                                                                                     tribute in settling PDAM debt

 5. Sector Institutions Reform
 5.1. Sector Management Organiza-         Form regional/aggregated manage-           Establish management body for water        Establish regulatory institution for
      tion                                ment of water supply.                      resources allocation                       wastewater
 5.2. Tariff Reform                       Revise rules on tariffs to support         Support establishment of cost-cover-
                                          improved cost-recovery                     ing trariffs



 6. Administration and Enforcement                                                   Institute rewards and penalties to         Review and improve regulations on
    of Regulations                                                                   encourage water conservation               wastewater management
                                                                                                                                Develop regulatory and technical
                                                                                                                                standards & guidelines for wastewater
                                                                                                                                management
                                                                                                                                Improve domestic and industrial waste-
                                                                                                                                water monitoring

 7. Communicarions Program                Launch public campaign on impor-           Implement school-based education           Implement environmental education
 7.1. Hygiene Promotion                   tance of clean and healthy living          program                                    and sanitation campaigns in local
                                          Implement school-based hygiene                                                        forums.
                                          campaign                                                                              Implement the community-led total
                                          Increase community participation for       Institute rewards and punishment for       sanitation program
 7.2. Water Education                     environmental conservation                 conservation


 8. Promoting Increased Investments
 8.1. Private Sector Participation        Review and revise regulations to           Review and revise regulations to           Identify business opportunities for
                                          increase private participation             increase private participation             sanitation service providers

 8.2. Facilitate New Sources of           Encourage participation from NGOs          Encourage local governments to invest      Encourage local governments
      Financing/Innovations                                                          in sector                                  participation in wastewater facilities
                                                                                     Promote cooperation between local          development
                                                                                     governments on water provision             Implement a program for extensifying
                                                                                     Encourage increased community              wastewater financing
                                                                                     investment


                                                                                                                                     Financing Study Report |              vii
Kebijakan Pendanaan                                                             Dengan pengecualian alokasi anggaran pemer-
Pendanaan publik untuk sektor ini berasal dari                                  intah daerah yang berdasar pada kerangka kerja
sumber-sumber berikut:                                                          jangka menengah dan untuk kasus-kasus di
• Alokasi anggaran pemerintah pusat untuk                                       mana pendanaan diambil dari pinjaman, saat ini
  mendanai kegiatan-kegiatan yang telah didel-                                  tidak ada penyaluran dana yang memiliki jaminan
  egasikan ke pemerintah daerah melalui Dana                                    melampaui alokasi tahunannya. Ada pula dana-
  Dekonsentrasi dan Tugas Perbantuan.                                           dana yang menurut pandangan pemerintah dae-
• Alokasi anggaran oleh pemerintah daerah, ter-                                 rah bersifat “off-budget”, walaupun penggunaan
  masuk Dana Alokasi Khusus – DAK.                                              utamanya untuk penyediaan AMPL. Kombinasi
• Pinjaman luar negeri yang diserahkan pemer-                                   dari faktor-faktor ini menciptakan tantangan bagi
  intah pusat ke pemerintah daerah.                                             perencanaan yang lebih rasional dan bersifat
• Pinjaman oleh pemerintah daerah. Selama                                       lebih panjang, yang sangat penting bagi sektor
  periode studi (2003-2005), tidak ada pinjaman                                 AMPL yang umumnya ditandai oleh investasi be-
  untuk proyek air dan sanitasi.                                                sar berjangka panjang.
• Sumber-sumber pendanaan lain yang dialo-
  kasikan dari APBN biasanya lebih bersifat ad                                  Sebagai tambahan, kerangka kerja perencanaan
  hoc atau sementara seperti contohnya Ang-                                     dan anggaran pada saat ini tidak mendukung
  garan Belanja Tambahan atau kompensasi                                        perencanaan yang mencakup keseluruhan sek-
  pengurangan subsidi bahan bakar.                                              tor. Untuk sektor yang dipegang oleh satu otoritas
                                                                                yang sama, hal ini bukan merupakan masalah,
Perkembangan kebijakan perencanaan dan                                          namun seperti yang telah dibahas sebelumnya,
penganggaran pada saat ini memberikan pelu-                                     otoritas di bidang penyediaan AMPL mencakup
ang bagi perencanaan dan pengawasan yang                                        banyak unit dan institusi. Perencanaan lintas in-
lebih bersifat sektoral. Reformasi pada saat ini                                stitusi dalam penyediaan AMPL diatur dalam PP
menekankan pada anggaran yang terintegrasi                                      16/2005 (sebagai peraturan pelaksana Undang-
dan berfokus pada kinerja, berdasarkan sudut                                    Undang Sumber Daya Air No 7 tahun 2005),
pandang pembangunan dengan jangka waktu                                         pada bagian yang menetapkan bahwa kebi-
yang lebih panjang. Proses baru ini menggunak-                                  jakan dan strategi pengembangan penyediaan
an rencana jangka panjang dan menengah pada                                     air minum nasional akan disusun oleh pemerin-
tingkat nasional dan daerah sebagai dasar bagi                                  tah setiap lima tahun sekali. Namun, akan lebih
proposal anggaran tahunan. Kebijakan pada                                       berguna apabila kita menghubungkan proses
saat ini juga mempertimbangkan penggunaan                                       ini dengan kerangka penganggaran sehingga
kerangka kerja pengeluaran jangka menengah,                                     penetapan prioritas diantara berbagai pilihan-
dengan plafon anggaran masa depan untuk                                         pilihan kebijakan menjadi jelas (karena terba-
pengguna anggaran.                                                              tasnya anggaran) dan pengeluaran akan terkait
                       Tabel 4.                                                 dengan pencapaian/keluaran program dalam
          Perbandingan antara Kebijakan dan                                     jangka pendek, dan hasil program dalam jangka
        Praktik Reformasi Anggaran dalam PAS
                                                                                panjang.
   Ketidakcocokan antara Reformasi Anggaran dengan Praktik
                Pendanaan PAS pada Saat Ini
 Pilar-pilar Reformasi Anggaran          Pendanaan AMPL Saat ini
 Kesatuan anggaran sehingga semua       Berbagai kegiatan ‘off budget’, teru-
 dana menjadi akuntabel dan dapat       tama dari sudut pandang pemerintah
 diawasi                                daerah yang memegang tanggung-
                                        jawab utama AMPL
 Penggangaran berdasarkan kinerja       Pencapaian hasil AMPL atau ketida-
 perlu untuk mendefinisikan hubungan     kberhasilannya tidak dapat dikaitkan
 antara input (alokasi) dengan output   secara mudah kepada badan tertentu
 dan hasil untuk memastikan efektifi-    karena sektor ini melibatkan berbagai
 tas anggaran                           tingkat pemerintahan dan berbagai
                                        badan.
                                        Tidak ada kontrak atau strategi yang
                                        mencakup keseluruhan sektor yang
                                        dapat dipergunakan untuk mengalo-
                                        kasikan tanggung jawab dan akunt-
                                        abilitas pendanaan antar pelaku.        1 Perlu dicatat, walaupun peraturan ini hanya mengatur men-
 Kerangka kerja pengeluaran jangka      Kebanyakan pendanaan bersifat             genai “penyediaan air minum”, kebijakan undang-undang
 menengah (MTEF) untuk perencanaan      tahunan dan bukan bertahun-tahun
 dalam jangka yang lebih panjang dan    dan tidak ada MTEF untuk sektor ini.      tersebut secara umum juga mendorong pembangunan sani-
 realistis
                                                                                  tasi yang terintegrasi.




viii | Financing Study Report
Tren Anggaran untuk Penyediaan AMPL                                 Sekitar 50% dari alokasi anggaran AMPL propinsi
2003-2005                                                           dan kabupaten diperuntukkan bagi penyediaan
                                                                    air. Namun, pada anggaran kota, penyediaan
1.1. Investasi Daerah untuk AMPL                                    air mendapatkan bagian yang lebih kecil; alo-
                                                                    kasi anggaran AMPL kota yang terbesar adalah
Rata-rata investasi daerah dalam sektor AMPL                        untuk saluran air. Alokasi anggaran AMPL untuk
di Indonesia (penyediaan air, sanitasi, limbah pa-                  limbah padat mendapatkan bagian kecil pada
dat dan saluran air) di lokasi WASPOLA tercatat                     semua tingkat pemerintahan, yang terbesar
paling tinggi untuk sektor perkotaan dan paling                     hanya mencapai 5% dari anggaran kota. Sani-
rendah untuk level propinsi, dilihat dari jumlah                    tasi mendapatkan sekitar seperlima dari total
dananya. Walaupun propinsi-propinsi memiliki                        alokasi anggaran untuk penyediaan air, namun
pendapatan per kapita yang relatif tinggi, sep-                     perbandingan ini bervariasi pada setiap tingkat
ertinya mereka tidak merasa bertanggungjawab                        pemerintahan.
dalam penyediaan AMPL. Kota-kota yang ber-
                                                                                         Gambar 2.
partisipasi dalam WASPOLA menginvestasikan                                Alokasi AMPL Pemerintah Daerah (Per Kapita)
jumlah dana tertinggi per kapita, sementara                                              2003-2005
propinsi-propinsi menginvestasikan jumlah per                             45,00

kapita yang jauh lebih sedikit dibanding kabu-
                                                                          40,00
paten atau kota.
                                                                          35,00
                     Tabel 5.
 Rata-Rata Alokasi Anggaran AMPL dan Rata-Rata                            30,00
   Pendapatan Daerah pada Wilayah WASPOLA
                                                                    IDR




                                                                          25,00
                    Rata-rata               Rata-rata Total
                 Anggaran AMPL            Pendapatan Daerah
                                                                          20,00
                 Dalam        Rupiah       Dalam        Rupiah
              Juta Rupiah    per Kapita Juta Rupiah    per Kapita
                                                                          15,00
 Kabupaten           1,689       6,162     789,804        475,790
                                                                          10,00
 Propinsi            3,071         661    2,669,782     1,615,314
                                                                           5,00
 Kota                4,611      30,251     469,379      3,825,743
                                                                             0
                                                                                  2003     2004      2005     2003     2004      2005   2003     2004    2005

                                                                                         Districts                   Provinces                  Cities
Kebanyakan alokasi anggaran AMPL daerah,                                                                    Local Government Level
sekitar 90%, diperuntukkan bagi investasi kapi-                                                Other WES               Sanitation       Water
tal. Hanya sejumlah kecil yang dialokasikan un-
tuk bantuan teknis, sosialisasi, dan pembangu-
nan kapasitas (lihat Gambar 1).                                     Studi ini juga mempelajari hubungan antara
                                                                    pendapatan daerah, produk domestik bruto
                   Gambar 1                                         daerah (PDBD) dan alokasi anggaran AMPL.
Alokasi Anggaran Daerah untuk Pengeluaran AMPL
           menurut Jenis Pengeluaran
                                                                    Pertambahan pada pendapatan daerah di-
                                                                    harapkan dapat berakibat pada peningkatan
             8% 0%
        2%                                                          alokasi AMPL, namun korelasi yang ditemukan
                                                                    lemah (0,14). Lebih lanjut lagi, hampir tidak ada
                                             Capital                korelasi (0,05) antara alokasi AMPL dan PDBD.

                                             Technical Assistance


                                             Project Support and
                                             Maintenance

                       90%
                                             Socialization and
                                             Capacity Building




                                                                                                                        Financing Study Report |            ix
1.2. Investasi Nasional AMPL                                  Departemen Kesehatan adalah departemen
                                                              yang menyalurkan dana terbesar nomor dua
1.2.1. Alokasi AMPL Departemen Pekerjaan                      untuk air dan sanitasi, namun jauh lebih sedikit
Umum                                                          dibandingkan Departemen Pekerjaan Umum.
                                                              Dalam jangka waktu tiga tahun, alokasi ang-
Alokasi dari Departemen Pekerjaan Umum ke                     garan umum Departemen Kesehatan untuk pe-
pemerintah daerah, baik secara nasional maupun                nyediaan air dan sanitasi hanya sebesar kurang
bagi peserta WASPOLA, kebanyakan untuk sek-                   dari satu persen dari jumlah yang dialokasikan
tor air. Secara nasional, sanitasi hanya mendapat             oleh PU, dan alokasi dari Depkes terus menurun
sekitar 15% dari total alokasi Departemen Pe-                 sepanjang jangka waktu studi. Di sisi lain, pen-
kerjaan Umum untuk penyediaan air, dan untuk                  danaan Depkes untuk sanitasi melebihi kontri-
peserta WASPOLA, sanitasi dialokasikan sekitar                busi PU. Namun, bagian yang lebih besar dari
sepersepuluh dari jumlah ini. Dua per tiga dari               dukungan Depkes terhadap penyediaan air dan
Alokasi Departemen Pekerjaan umum dianggar-                   sanitasi, dilakukan melalui Proyek Water Supply
kan untuk investasi fisik dan hampir keseluruhan               for Low-Income Communities (WSLIC). Alokasi
sisanya untuk bantuan teknis, yang meliputi in-               Depkes yang terkait dengan WSLIC ‘’mengerdil-
vestigasi optimalisasi sektor, rancangan teknik               kan’’ alokasi mereka secara umum, karena be-
detail dan studi kelayakan yang terkait dengan                sar alokasi yang terkait dengan WSLIC adalah
investasi fisik.                                               98% dari total dukungan Depkes pada bidang
                                                              AMPL.
Studi ini juga menguji korelasi antara alokasi
AMPL Departemen Pekerjaan Umum dengan
alokasi AMPL pemerintah daerah. Hubungan                      1.3. Dukungan Pemerintah Pusat dan Dae-
yang ditemukan bersifat positif walaupun le-                  rah kepada PDAM
mah (0,21). Dibanding dengan alokasi nasional
di wilayah-wilayah WASPOLA, sebagian besar                    Dari seluruh pemerintah daerah yang berpartisi-
dana untuk sektor ini, kecuali untuk penanganan               pasi dalam WASPOLA, hanya propinsi Sumatra
limbah padat, telah dialokasikan oleh pemerin-                Barat dan kabupaten Gorontalo yang mengalo-
tah daerah. Kombinasi dari kedua pengamatan                   kasikan dana untuk mendukung dan mengawasi
ini menunjukkan bahwa ada kesempatan bagi                     PDAM. Di sisi lain, dukungan dari pemerintah
lembaga-lembaga tingkat pusat untuk lebih me-                 pusat, melalui Departemen Pekerjaan Umum,
manfaatkan dana dari pemerintah daerah.                       mencapai rata-rata sebesar 30 persen selama
                                                              periode tiga tahun tersebut. Kebanyakan dukun-
                      Tabel 6.                                gan kepada PDAM berbentuk bantuan teknis
   Alokasi Sub-Sektor di Wilayah WASPOLA untuk
                 Tahun 2003-2004                              – optimalisasi dan kegiatan perancangan.

                 Oleh             Oleh            Daerah      Kesimpulan dan Rekomendasi
              Departemen       Pemerintah         sebagai
               Pekerjaan         Daerah         persentase
                Umum                             dari Total   1. Investasi pada saat ini berada di bawah
                                                                 tingkat yang dibutuhkan untuk mencapai
Penyediaan 49,292,425,000      91,008,643,356       65%
air                                                              target pemerintah di sektor ini. Alokasi dae-
                                                                 rah untuk AMPL, rata-rata, hanya sebesar
                925,000,000
                                                                 kurang dari 1 persen dari total pendapatan
Sanitasi                       20,697,563,605       96%
                                                                 daerah dan alokasi tahunan untuk sektor
                                                                 ini adalah sebesar rata-rata 0,40 dolar AS
Kotoran        4,379,282,000    3,660,089,006       46%
Padat                                                            – sekitar 0,03 persen dari PDB per kapita.
                                                              2. Komposisi dan tren alokasi sektor menun-
               1,861,903,000
                                                                 jukkan peningkatan alokasi oleh pemerintah
Saluran air                    73,102,575,664       98%
                                                                 daerah, namun terdapat potensi untuk pen-
Total         56,458,610,000 188,468,871,631        77%          ingkatan arahan nasional dari pusat. Perge-



x | Financing Study Report
   seran sumber investasi sektor dari pemerin-        maupun dari umpan balik pemerintah dae-
   tah pusat ke pemerintah daerah telah terlihat      rah, cukup jelas bahwa parameter dasar dari
   dalam wilayah studi, dimana pemerintah             perencanaan keuangan sektor tidak terse-
   daerah mendanai sekitar 46 persen sampai           dia, atau parameter tersebut tidak diketahui
   90 persen dari total kegiatan sub-sektor. Hal      oleh pemerintah daerah. Cara-cara yang
   ini menunjukkan keinginan pemerintah dae-          sederhana dapat dikembangkan dan dise-
   rah untuk melakukan investasi pada bidang          barluaskan untuk mendukung penguatan
   AMPL. Namun, studi ini juga menemukan              perencanaan investasi di bidang AMPL sep-
   korelasi yang lemah antara pendapatan              erti tabel biaya standar untuk paket layanan
   daerah dan PDBD dengan alokasi AMPL.               minimum dan program reformasi; aturan
   Advokasi secara umum untuk kepentingan             untuk pengelompokan dan penamaan input
   sektor AMPL dipandang akan mendatang-              dan kegiatan/keluaran; ketersediaan dan
   kan manfaat, dan departemen-departemen             publikasi data-data acuan, baik untuk input
   terkait dapat bekerjasama dengan pemer-            (biaya) maupun total investasi untuk menilai
   intah daerah dalam membangun kapasitas             program dengan membandingkannya den-
   mereka dalam mengembangkan strategi,               gan pengguna anggaran lainnya/pemerintah
   perencanaan dan pelaksanaan program di             daerah.
   sektor ini. Pemerintah pusat juga memiliki      5. Pada tingkat pusat, GOI perlu menyele-
   peluang untuk mengarahkan pemerintah               saikan proses pengembangan strategi me-
   daerah melalui pemberian transfer yang bisa        lalui kesepakatan yang lebih luas (antar-
   diperkirakan dan bersifat jangka panjang           departemen) mengenai layanan mendasar
   yang didasarkan pada prioritas program             dan paket reformasi prioritas dengan tujuan
   yang jelas dan pencapaian hasil.                   untuk meningkatkan anggaran keseluruhan
3. Pemerintah daerah memainkan peranan                sektor dan memperbaiki efektifitas.
   yang semakin penting dalam pendanaan            6. Dibutuhkan kejelasan mengenai pembagian
   sektor, namun dana dan kapasitas yang ada          tanggungjawab berbagai tingkat pemerin-
   terbatas. Walaupun pemerintah daerah se-           tahan, terutama antara propinsi dengan ka-
   makin memperbesar tanggung-jawab mer-              bupaten/kota. Walaupun memiliki pendapa-
   eka dalam sektor, masih sedikit sekali sum-        tan yang relatif tinggi, propinsi ternyata
   berdaya yang diinvestasikan untuk AMPL             tertinggal dalam hal alokasi di sektor ini. Pola
   dan pendanaan sektor ini sepertinya akan           ini mencerminkan kerancuan peran propinsi
   terus dibatasi oleh berbagai kepentingan           dalam AMPL.
   lain. Perbaikan kinerja fiskal dan pengelolaan   7. Institusi-institusi terkait perlu diberi tang-
   keuangan bukan merupakan satu-satunya              gung jawab untuk melaporkan, mengumpul-
   tantangan yang dihadapi oleh pemerintah            kan dan menganalisa keuangan dan kinerja
   daerah. Tantangan utama adalah untuk me-           sektor secara berkala, dan perlu ada sum-
   mastikan bahwa perbaikan secara progresif          berdaya yang mendukung kegiatan ini ter-
   dan kelayakan dari layanan AMPL cukup              masuk audit secara acak. Tinjauan finansial
   untuk menghasilkan kepercayaan dari pem-           untuk sektor ini memerlukan proses peng-
   beri dana potensial, termasuk konsumen,            umpulan dan analisa yang bersifat komple-
   dan untuk menyeimbangkan antara kepent-            menter karena informasi menyangkut sektor
   ingan umum dan komersil. Hal ini memer-            ini tersebar di seluruh unit-unit anggaran
   lukan perencanaan dan pengawasan sekto-            dan tingkatan pemerintah. Kemampuan un-
   ral yang lebih baik, selain juga kemampuan         tuk menganalisa kualitas pengeluaran sektor
   teknis dan pengelolaan proyek, yang saat ini       pada saat ini terbatas karena (i) data keuan-
   belum tersedia.                                    gan yang dilaporkan kebanyakan berupa
4. Kapasitas institusi-institusi sektor untuk         perencanaan ke depan (forward-looking),
   mengembangkan rencana investasi yang               contoh: informasi mengenai alokasi anggaran
   realistis dapat diperkuat dengan cara-cara         tersedia, namun data pengeluaran, walaupun
   yang sederhana. Berdasarkan kajian ini,            tersedia, biasanya mencerminkan alokasi.



                                                                               Financing Study Report |   xi
8. Penyaluran dana nasional untuk AMPL pada          •   Pembahasan mengenai pembuatan suatu
    saat ini memiliki jangka waktu pelaksanaan           nota kesepahaman sektor mengenai lay-
    yang pendek (tahunan) dan tidak bisa di-             anan minimum dan paket reformasi prioritas
    pastikan dari tahun ke tahun. Terlebih lagi,         yang akan berada di bawah koordinasi Bap-
    terkecuali untuk DAK dan dana hibah, dari            penas.
    sudut pandang pemerintah daerah, Dana            •   Berbagi hasil studi dengan, dan meminta
    Dekonsentrasi and Perbantuan bersifat “off           masukan dari, pemerintah daerah mengenai
    budget.” Faktor-faktor ini berpotensi untuk          pandangan mereka tentang jenis dukungan
    menurunkan kapasitas lokal dalam meme-               yang mereka harapkan dari pemerintah pu-
    lihara dan mendukung program selama                  sat; berbagi good practices dari pemerintah
    pelaksanaan. Kepastian pendanaan sangat              daerah dalam investasi sektor dan pengem-
    penting untuk perencanaan, terutama untuk            bangan strategi sektor.
    proyek investasi kapital yang memiliki waktu     •   Pengembangan situation self-assessment
    persiapan yang panjang seperti penyediaan            dan catatan arahan strategi dan proses un-
    AMPL. Walaupun anggaran untuk tahun-                 tuk pemerintah daerah sebagai masukan
    tahun berikutnya tidak dapat dipastikan,             bagi pengembangan program AMPL nasi-
    rencana investasi jangka menengah sektor,            onal.
    yang memperkirakan jumlah yang perlu di-         •   Pengembangan rencana investasi sektor
    alokasikan untuk sektor, dapat menjadi pe-           dengan unit pembiayaan per paket kebi-
    tunjuk yang berguna bagi pemerintah dae-             jakan.
    rah dan pusat. Sistem pembayaran hibah
    berdasarkan hasil yang dicapai juga dapat        Tahap 2
    dipertimbangkan.                                 •   Bersamaan dengan hal-hal di atas, mu-
9. Perlu dialokasikan lebih banyak lagi sum-             lai pelaksanaan tahap ke dua dari tinjauan
    berdaya nasional untuk penguatan institusi           pendanaan sektor melalui perusahaan dae-
    dan pengembangan kapasitas daerah untuk              rah dan tarif pengguna.
    perencanaan dan pemrograman sektor.
10. Pengeluaran daerah untuk pemeliharaan
    dan ‘piranti lunak’ perlu ditingkatkan secara
    proporsional untuk memastikan ketahanan
    dan efektifitas investasi modal yang telah di-
    lakukan.
11. Berbagai jenis pendanaan jangka panjang
    perlu disediakan bagi pemerintah daerah,
    dan bagi perusahaan daerah yang menun-
    jukkan berbagai tingkat kesiapan dan tang-
    gungjawab.

Langkah Selanjutnya dalam Strategi Keuangan
Langkah-langkah di bawah ini diperlukan untuk
menggerakkan proses strategi keuangan sektor
ini. Kegiatan-kegiatan kunci ini perlu dibahas dan
disepakati dengan GOI, dan jadwal kerja akan
ditetapkan berdasarkan hasil diskusi tersebut.

Tahap 1
• Konsultasi antara Bappenas, Departemen
   Keuangan, Departemen Pekerjaan Umum,
   dan Departemen Kesehatan mengenai
   temuan studi.



xii | Financing Study Report
Background Report

Review of Water Supply and Sanitation
Financing in Indonesia




1. Introduction                                      improving capacity and accountability at the lo-
                                                     cal level by predictability of financing and suffi-
Indonesia is at the same time vast and over-         ciency of funds allocated for capacity-building.
crowded. Its territory is divided into hundreds
of local administrative units – 33 provinces, 50     1.1. Objective of the Study
cities and 445 districts. About 60 percent of a
total of 217 million people live on Java Island.     The Government of Indonesia (GoI), through the
Here, the five major cities are home to 12 per-       Water Supply and Environmental Sanitation (Air
cent of the entire population. By contrast, resi-    Minum dan Penyehatan Lingkungan – AMPL)
dents of the province of Papua, about five times      Working Group, with support from the Water and
larger than Java, comprise one percent of the        Sanitation Program – East Asia and the Pacific
population.                                          (WSP-EAP) and the World Bank, commissioned
                                                     this review of financing in water supply and sani-
The management of basic services under such          tation to provide an improved basis for the de-
extreme spatial conditions is expectedly com-        velopment of financing strategies for Indonesia’s
plicated and requires a well planned approach        water supply and sanitation sector.
to infrastructure development, which has not
been the case for water supply and sanitation,       The aim of this study is to provide sector stake-
particularly in the last decade. Estimating and      holders with a snapshot of the order of magni-
allocating resources required in the continu-        tude and quality of investments made in water
ing promotion of sustainable water supply and        supply and sanitation after decentralization as a
sanitation development across the vast territory     means of exploring the underlying issues related
has become especially difficult under decentral-      to the gap in sector financing, effectiveness of
ization. The challenge arises not only because       current channels of funds and institutional ar-
responsibilities have become diffused, but also      rangements, which would serve as basis for rec-
because information systems still are too weak       ommendations on a way forward for developing
to support such exercises.                           a sector investment plan.

Decentralization, however, offers great opportu-     In the context of Indonesia, developing a sec-
nities for redefining lines of sector responsibili-   tor strategy and investment plan will not be
ties between central and local levels of govern-     achieved overnight as key sets of information re-
ment underpinned by more effective modes of          main unavailable. Prior to this study, attempts at
public financing (through inter-governmental          quantifying investments in water supply and san-
transfers) and articulated in a sector investment    itation have been limited to global figures of in-
plan. Such a plan could be an instrument for         vestments in water, which included irrigation and
better defining sector priorities and the role that   water resources conservation, and very limited
various institutions will play and the resources     disaggregated information on funds allocated for
from which they can draw. In the Indonesian          sanitation.
context, it is critical that the sector investment
plan emphasize results, but at the same time,
ensure that the allocation of resources promotes



                                                                                 Financing Study Report |   1
1.2. Study Scope, Method and Limitations               on seven provinces, two cities and 19 districts
                                                       and the relevant district offices, participating in
This study looks at public financing for water          the Water Supply and Sanitation Policy Action
supply and sanitation operations and investment        Planning Project (WASPOLA), under which this
during a three year post-decentralization period,      study is commissioned. Annex 3 provides key
2003-2005.                                             information about these local governments.

                                                       The study considers sector financing from cen-
1.2.1. Sector Focus                                    tral and local line department budgets in support
                                                       of local government-owned water utilities (Peru-
The review is focused on water supply and sani-        sahaan Daerah Air Minum - PDAMs). PDAMs,
tation, which have relevant Millennium Devel-          however, maintain their own books of accounts
opment Goals (MDGs) that GoI has endorsed.             and flows into the sector from PDAM internally-
“Water supply” pertains to activities related to the   generated revenues and financing were not in-
distribution of water for domestic and municipal       cluded in this initial review.
uses, including source development and treat-
ment, whether piped or through point sources.
The study did not investigate water resource           1.2.3. Budget Reviews
management, development of reservoir and
other infrastructure for the transport and treat-      National sector ministry and local government
ment of bulk water which are no less important         budget documents were examined in this study.
given the acute water shortages in many parts          Data on expenditure (“realization”) also were
of Indonesia.                                          collected, but proved insufficient to yield use-
                                                       ful results. When reported, most expenditure
Consistent with the primary focus on MDGs, the         data simply mirrored budgeted amounts and the
study’s scope of “sanitation” is limited to col-       study, therefore, is based on budget allocations
lection and disposal of excreta and domestic           only.
wastewater, including hygiene promotion, but
not to the broader definition of “environmental         The composition of sector allocations was ana-
sanitation” recognized in GoI policy, which in-        lyzed by verifying budget items against their sup-
cludes solid waste and drainage. Most budget           porting documents to determine the precise na-
data, however, also include information on solid       ture of activities/outputs. Allocations were then
waste and drainage, and whenever available,            classified by sub-sector: i. water supply, ii. sani-
such data are presented in this report for com-        tation, iii. solid waste, iv. drainage or a combi-
parison.                                               nation of sub-sectors i-iv. Allocations also were
                                                       classified according to the type of their activ-
The study looks at aggregate financing for ur-          ity/output: i. physical, ii. technical assistance, iii.
ban and rural areas because in all cases, budget       project support and maintenance and iv. “social-
documents did not differentiate between these          ization” of policies or capacity-building. These
locations.                                             activity / output types are described in Tabel 5.


1.2.2. Institutional Focus
                                                       3 Ministry of Environment also is considered a key implement-
The study focuses only on selected national and          ing agency, however, based on consultations with their plan-
                                                         ning, budget and line directorates, it was not possible to
local government agencies. At the central level,         disaggregate the Ministry’s water and sanitation data from
the Ministries of Health and Public Works were           general water resource/environment. Other important agen-
                                                         cies involved in the sector include Bappenas, whose role is
selected as the agencies with the most significant        largely coordination and policy development and does not in-
programs dealing directly with water supply and          volve direct sector investment, and Ministry of Finance; how-
                                                         ever, only one subsidiary loan (on-lent through MoF to local
sanitation.3 At the local level, the review focuses      districts) was made during 2003-2005.




2 | Financing Study Report
                     Table 1.                                    1.2.4. Other Reviews
 Classification of Budget-funded Activities/Outputs

                                                                 While budget reviews focused on selected insti-
   Classification of Budget-funded                                tutions, interviews also were conducted with a
   Activities/Outputs                                            wide set of national agencies involved in sector
                                                                 policy-making, service delivery and local govern-
   • Physical project – rehabilitation or con-                   ment financing. Laws, regulations, and policy
     struction of new infrastructure/facilities, in-
                                                                 and strategy documents regarding sector priori-
     cluding the capitalization of costs of con-
     struction (such as materials and labor)                     ties and public financing also were reviewed.
   • Technical assistance –analytical work, in-
     cluding planning activities, engineering de-
     sign, feasibility studies and research                      2. Sector Background
   • Project support, administration and main-
     tenance – maintenance of existing assets,
                                                                 Before decentralization in 2001, central minis-
     project and day-to-day administration and
     activities undertaken to carry out mandat-                  tries exercised almost all authority for infrastruc-
     ed functions, such as testing or regulation                 ture planning, development and financing in
   • Socialization and capacity-building –                       water supply and sanitation. National line min-
     promulgation of sector policies; informa-                   istries, led by the Ministry of Public Works, were
     tion, education and communication (IEC)                     responsible for developing sector master plans
     campaigns; and other general workshops
                                                                 and programs, and technical specifications. Ta-
     and training activities
                                                                 riff policies were also set at central levels. On the
                                                                 other hand, operations and maintenance tradi-
                                                                 tionally was assigned by the center to local gov-
Comparison and correlation of budget alloca-
                                                                 ernments – a practice that has become formal
tions within and across levels of government
                                                                 policy only after decentralization.
and types of activities were conducted. General
local government budget information also was
obtained in the study and disaggregated into the
                                                                 2.1. Position at Decentralization
government financial reporting classifications
shown in Table 2.
                                                                 The separation of responsibility between cen-
                    Table 2.                                     tral and local governments described above is
  Simplified Local Government Budget Structure                    reflected in the composition of public spending
                                                                 prior to decentralization, where central levels of
 total inflow                         total outflow                government accounted for 90 percent - spent
   own revenue                        capital expenditure        mostly on capital investment.
   (pendapatan asli daerah-           operational expenditure
   PAD )                              personnel
   • local taxes                      goods and services
   • local levies/charges for         travel
                                                                 As a policy, assets created through national
     services
   • income from regionally-
                                      maintenance
                                      other
                                                                 grants never formally transferred to local gov-
     owned enterprises                                           ernments, even after decentralization. Instead,
   • other                            revenue sharing to lower
                                      levels                     assets generally were treated in local books of
   balancing funds                    unplanned expense
   • revenue sharing from taxes                                  accounts as “national equity” – except that the
   • revenue sharing from natural
     resources
                                                                 share-owners (national government) also fully
   • general allocation fund (DAU)
   • special allocation fund (DAK)
                                                                 relinquished responsibility for operations and
                                                                 maintenance to the local government.4
   transfers
   • other transfers from central
     government
   • transfers from provincial
     government

   other revenues                                                4 State-owned water supply utilities (BPAMs), created with
   • other grants
   • emergency funds                                               national funding, were transformed into local water utilities
   • other                                                         (PDAMs) once a certain level of operational independence
                                                                   was reached.




                                                                                                     Financing Study Report |   3
Indeed, the sector, or at least, water supply, has                        Table 3.
                                                     Average Annual Water Sector Development Spending
enjoyed growing central government support
over the last decade, thus spending had been                                       Average            Average           Average
                                                                                  (1994 - 97)      (1998 - 2000)       (2001- 02)
steadily increasing even before decentralization.            Level of
                                                                                 in Billion Rp      in Billion Rp     in Billion Rp
                                                           Government
Soft loan financing was also available to local                                      Historical       Post Crisis
                                                                                                                        Under
                                                                                                                    Decentralization
governments, or their local government-owned
                                                      Central                               842         1,450.8           1,985.1
enterprises (Badan Usaha Milik Daerah - BUMDs)
                                                      Province                                55          106.6              284.6
through the Ministry of Finance (MoF).                District and Cities                     29            53.8             335.5
                                                      Total                                 926         1,610.5           2,605.3
But the highly centralized and dichotomous            As percent of GDP*                 0.23%           0.40%             0,64%
system did not foster local capacity develop-        *2000 Constant Prices; Analyzed from Sistem Informasi Keuangan Daerah and MoF Data

ment and responsible sector management and
                                                     Importantly, average total water sector spend-
opened opportunities for exploitation; on the
                                                     ing in the first two years after decentralization
other hand, low tariffs and investment and op-
                                                     jumped 60 percent above the historical after-cri-
erational inefficiencies weighed down utilities,
                                                     sis average. While spending increased both at
creating a vicious cycle of under performance.
                                                     central and local levels, local government spend-
Thus, despite increasing investments, the sec-
                                                     ing (provinces and districts) increased almost
tor experienced declining technical and financial
                                                     three-fold and district level spending increased
performance.
                                                     by a factor of six. Rural water supply and sani-
                                                     tation, traditionally financed through grants from
On the years preceding decentralization, Indo-
                                                     the central Ministry of Health and donors, post-
nesia was visited by the Asian financial crisis,
                                                     decentralization is funded increasingly through
which exacerbated fundamental weaknesses in
                                                     cost-sharing arrangements with either or both
the financing and operation of urban water utili-
                                                     levels of local government and accounts for part
ties and sanitation projects. Utilities and local
                                                     of the increase. Despite increasing local govern-
governments with debts financed from offshore
                                                     ment investment, however, the central govern-
sources held no protection from currency risks,
                                                     ment still accounted for more than three-quarters
and thus, many utilities became bankrupt. With
                                                     of water sector expenditure in 2001 and 2002.
decentralization also came revenue transfers
from the center, but also the transfer of a large
                                                     On the other hand, financial viability of local
bureaucracy from the center to local levels with
                                                     water supply utilities (PDAMs) continued to de-
its concomitant impact on local budgets and
                                                     teriorate with low revenues and escalated debt
their financial position.
                                                     service obligations from loans outstanding with
                                                     the national government through the Ministry of
                                                     Finance (MoF). Accumulated unpaid receivables
2.2. Position Post-Decentralization
                                                     from PDAMs were valued by MoF at US$275 mil-
                                                     lion in 2004, up from US$166 million in only one
Table 3 shows average historical water sector
                                                     year. MoF has been extremely cautious in lend-
spending (including water resources manage-
                                                     ing to local governments and PDAMs for water
ment and development) and spending in the
                                                     supply and sanitation, while restructuring of local
years immediately before and after decentraliza-
                                                     liabilities following the crisis has been slow and
tion. Despite the crisis, the water sector enjoyed
                                                     implemented piecemeal. Consequently, the sec-
increasing, albeit modest, investments relative to
                                                     tor currently has no access to one of its largest
the national GDP.
                                                     traditional sources of capital financing through
                                                     MoF and utilities are unable to finance improve-
                                                     ments adequately through internally generated
                                                     revenues.

                                                     In the short-term, this financial squeeze means
                                                     the quality of spending from currently available


4 | Financing Study Report
public sources must improve. The role of gov-          formed by these agencies.
ernment in directing resource flows to meet sec-
tor objectives and ensuring quality of spending        On the other hand, after decentralization, respon-
therefore is critical.                                 sibility for planning, development and provision
                                                       of water supply and sanitation services devolved
                                                       to local governments. The earlier framework
3. Institutional Context                               of political and fiscal decentralization that was
                                                       drawn up (through Law 24 and 25 of 1999) did
Not unlike other countries in the region, the wa-      not see much of a role for the provincial govern-
ter supply and sanitation sector in Indonesia is       ments. This was corrected in later amendments
characterized by multiple institutional actors in-     to the fundamental decentralization laws (Law
volved in different sector development activities.     32 and 33 of 2004), which gave a larger role
The complicated state of inter-governmental re-        to the province in the oversight of districts/cit-
lations shapes the current practice in the sector’s    ies development plans. However, under current
public financing – characterized by multiplicity of     government regulation, responsibilities between
budget units, utilizing varying funds channeling       provinces on the one hand and cities or districts
schemes, and reflecting parallel priorities. The        on the other in relation to water supply develop-
challenge of coordination and achieving clarity        ment are identical, except that provinces have
on institutional roles is not superficial in Indo-      the additional mandate over inter-district activi-
nesia because ambiguity in the assignment of           ties and disputes. Both levels of government, for
functions among institutions compromises their         example, can create locally-owned water enter-
accountability.                                        prises. In practice, service provision falls within
                                                       the direct responsibility of cities/districts, while a
Table 4 and Table 5 present the various institu-       number of provinces have initiated sector plan-
tions involved in the sector. The matrices orga-       ning activities and provided block budget trans-
nize their roles into the following broad functional   fers to cities/districts below them.
categories: i. policy development and planning;
ii. infrastructure development and rehabilitation;     Urban water is commonly supplied through
iii. technical assistance for program implemen-        PDAMs, which are often owned by district or
tation and operations; iv. administration and          city governments. Tariffs charged by PDAMs
enforcement of regulations; v. capacity-building       are approved by the local parliament, but the
and training; vi. promotion and “socialization”        Ministry of Home Affairs provides guidance on
(whether to the general public or specific tar-         how tariffs are set; meanwhile, the newly created
gets); and vii. financing.                              BPP SPAM under the Ministry of Public Works
                                                       has authority to recommend policies/actions
A check mark (a) indicates that the function is        towards the regulation of utility performance.
a mandate of the institution. A color gradient re-     PDAMs, however, only cover about 17% of the
flects the extent of the function being performed.      total population. Other urban residents rely on
Initially, this grading is a qualitative judgment      small-scale and commercial private providers.
based on research and interviews conducted;            In rural areas, safe sources of water are mostly
it can be quantified further as more budget al-         managed by the community, organized through
location and expenditure information becomes           national programs.
available.
                                                       Provision of sewerage or other wastewater col-
After decentralization, national government’s          lection and treatment services falls under the
role, in theory, has been more limited to policy       management of a line department within a local
development, including standards setting, facili-      government unit at provincial- and also at city/
tation and capacity-building of local enterprises      district-levels. The responsible department is
and financing. These roles are performed by             not standard across local governments. In only
various directorates under different ministries.       a few cases do PDAMs also provide sanitation
Annex 1 summarizes the different functions per-        services.e 10.


                                                                                      Financing Study Report |   5
                                                                                                                                                       Table 4. Roles of National Government
                                                                                  Coordinating
                                                                                   Minister for
                                                                                  Economic &                                                                                                                                               Ministry of                                                                                      Ministry of
                                                                                                                      Bappenas                                Ministry of Finance                       Ministry of Public Works            Health              Ministry of Environment                  Ministry of Home Affairs            Mining
                                                                                    Finance

                                                                                                  Directorate   Directorate Directorate Directorate Directorate Directorate Directorate Directorate     Directorate Directorate BPP SPAM   Directorate   Directorate Directorate    Directorate   Directorate   Directorate Administra-
                                                                                                  for Human      for Water      for         for     for Budget & for Budget & for Financial for Water   for Waste for Planning              of Envi-      for Small-     for       for Support    for Spatial       for     tion of Local
                                                                                                  Settlements   Resources Environment     Health      Treasury     Treasury    Institutions  Supply        Water     & Program             ronmental     Enterprises  Conser-        Units &       Planning     Community Budget and
                                                                                                                                                    (Anggaran 1      (Local                                          (in each of             Health      & Domestic    vation        Environ-                   Department     Localy-
                                                                                                                                                     on Sectors) Government                                         the sub-sec-                           Pollution                  mental                                   Owned
                                                                                                                                                                   Finance)                                              tors)                             Control                  Financing                                Enterprises

                             Policy Development and Planning
                               Coordination of inputs/activities of various
                               institutions


                               Priority-setting. Development of core sector
                               strategies and plans
                                                                                                                                                                                                                                                                                                                                                          Mandated function




                               Monitoring of achievement of policy outcomes




6 | Financing Study Report
                             Infrastructure Development and Rehabilitation
                                Construction and rehabilitation of water supply
                                and sanitation infrastructure


                               Construction and rehabilitation of support
                               infrastructure such as water quality laboratory
                               testing facilities
                               Operation and maintenance of water supply
                               and sanitation infrastructure


                             Technical Assistance for Program
                             Implementation
                               Conduct of studies, investigations and
                               evaluations on water supply and sanitation
                               methods, strategies or techniques
                               Development of skilled workers or experts to
                               support water supply and sanitation project
                                                                                                                                                                                                                                                                                                                                                          Function not performed extensively




                               implementation
                               Regulation of use of natural resources,
                               such as water and land

                             Administration and Enforcement
                             of Regulations
                                Regulation of performance of service providers


                               Development of technical or performance
                               standards for services

                               Development of water quality and effluent
                               standards

                               Enforcement of regulation, including licensing,
                               testing and prosecution

                             Capacity Building and Training
                               Conduct of learning and skills upgrading activi-
                               ties for water supply and sanitation service
                               providers or communities managing services
                               Conduct of learning and skills upgrading activi-
                                                                                                                                                                                                                                                                                                                                                          Function performed less extensively




                               ties of health and education frontline workers
                               on water supply and sanitation issue/skills
                               Facilitation and transaction support for
                               providers of water supply and sanitation service
                               or goods
                             Promoton and Socialization
                               Hygiene promotion



                               Advocacy for conservation and proper use of
                               water resources

                               Advocay for increased investments in water
                               supply and sanitation

                             Financing or Water and Sanitation Program

                               Development of sector finance policies
                                                                                                                                                                                                                                                                                                                                                          Function performed extensively




                               Provision of financing and management of fund-
                               ing windows for water supply and sanitation
                                                                           Table 5.
                                                    Roles of Local Government (Provinces, Cities and Districts)

                                                                                             Badan
                                                                                                            Badan           Dinas
                                                                                         Pengendalian                                    Badan          Dinas
                                                                               Dinas                    Penataan Ruang   Lingkungan
                                                        Bappeda   Dinas PU                  Dampak                                    Pemberdayaan   Kesejahteraan   PDAM
                                                                             Kesehatan                  dan Lingkungan    Hidup dan
                                                                                          Lingkungan                                   Masyarakat       Sosial
                                                                                                             Hidup       Kebersihan
                                                                                            Daerah
Policy Development and Planning
  Coordination of inputs/activities of various
  institutions

  Priority-setting. Development of core sector
  strategies and plans

  Monitoring of achievement of policy outcomes


Infrastructure Development and Rehabilitation
   Construction and rehabilitation of water supply
   and sanitation infrastructure

  Operation and maintenance of water supply
  and sanitation infrastructure

  Construction and rehabilitation of support
  infrastructure such as water quality laboratory
  testing facilities
  Operation and management of support
  infrastructure

Technical Assistance for Program
Implementation
  Conduct of studies, investigations and
  evaluations on water supply and sanitation
  methods, strategies or techniques
  Development of skilled workers or experts to
  support water supply and sanitation project
  implementation
Administration and Enforcement
of Regulations
   Regulation of use of natural resources, such as
   water and land

  Regulation of performance of service providers


  Development of technical or performance
  standards for services

  Development of water quality and effluent
  standards

  Enforcement of regulation, including licensing,
  testing and prosecution

Capacity Building and Training
  Conduct of learning and skills upgrading activi-
  ties for water supply and sanitation service
  providers or communities managing services
  Conduct of learning and skills upgrading activi-
  ties of health and education frontline workers
  on water supply and sanitation issue/skills
  Facilitation and transaction support for
  providers of water supply and sanitation service
  or goods
Promotion and Socialization
  Hygiene promotion


  Advocacy for conversation and proper use of
  water resources

  Advocay for increased investments in water
  supply and sanitation

Financing or Water and Sanitation Program
   Provision of financing and management of
   funding windows for water supply
   and sanitation




                                                                                                                                            Financing Study Report |        7
3.1. National Level                                        The root problem in coordination and account-
                                                           ability is the lack of sector-wide agreement
In examining the mandates and practice of the              among institutions on the various program ar-
various institutions, a few observations can be            eas and roles for which they will be responsible.
made.                                                      Individual directorates or ministries may have
                                                           action plans, but linkages to shared strategies
First, the national-level mandates currently are           and sector outcomes are not apparent. Further,
focused on policy development, technical as-               while many institutions have a mandate to moni-
sistance, capacity-building and socialization of           tor sector outcomes, few resources are available
policies and promotion. In the context of de-              to do so.
centralization, this is appropriate. It is important,
therefore, that sufficient resources are available
to and allocated by the national level institutions        3.2. Local Level
to fulfill their mandate, but evidence from this
study suggests that these types of activities are          At the local level, both provincial and city/district,
only a marginal part of the national sector bud-           there are many budget units involved in water
get.                                                       and sanitation. In the study sample, eight depart-
                                                           ments/units were identified as possibly involved
Second, while there are specific cases of over-             in the sector.5 Not all departments are present
lap between institutions, most common func-                in all local government units – each unit having
tions are shared appropriately. For instance,              2-4 such departments. Most local governments
priority-setting and development of core sector            have departments for public works (Dinas Pe-
strategies benefit from different perspectives and          kerjaan Umum) and health (Dinas Kesehatan) at
expertise. Provision of technical assistance, de-          both provincial and city/district levels. More than
ployment of expertise and capacity-building also           a third had either a department for settlements
are cross-cutting functions.                               and environment (Badan Penataan Ruang dan
                                                           Lingkungan Hidup), environmental sanitation (Di-
The risk of inefficiency in public spending stems           nas Lingkungan Hidup dan Kebersihan; Dinas
not from overlapping mandates, but rather be-              Kebersihan dan Pertamanan) or pollution control
cause of poor coordination of inputs toward                (Badan Pengendalian Dampak Lingkungan Dae-
overall sector objectives. Poor coordination               rah). In a few, community empowerment offices
dissipates the impact of already insufficient re-           (Badan Pemberdayaan Masyarakat or Dinas Ke-
sources when these funds are spent on duplica-             sejahteraan Sosial) also were involved. The local
tive activities and result in inability to track overall   planning and development unit (Badan Peren-
sector progress.                                           canaan dan Pembangunan Daerah – Bappeda)
                                                           was involved as overall coordinator, but faced
Current mechanisms for coordination depend                 similar challenges in playing this role as does its
primarily on persuasion and good relationships             national counterpart.
between actors. The AMPL working group,
convened by National Development Planning                  Despite the many actors, a number of mandates
Agency (Badan Perencanaan dan Pembangu-                    still have no institutional home. Sector planning,
nan Nasional – Bappenas) and formed through                service performance regulation and enforcement
government decree (Surat Keputusan Pemerin-                of regulations are among the most important
tah), has been used as a venue for coordination,           gaps. These gaps result either from a function
but its ability to monitor overall sector progress,        not being assigned or not currently having any
seek an account from different institutions for            funding.
achievement of targets, or influence how public
funds are allocated to reflect policy directions or         5 There are possibly other departments/units found in local
adjustments to policy reviews, is limited.                   governments that were not part of this study since there are
                                                             no uniform structures for the sector across local administra-
                                                             tions.




8 | Financing Study Report
In all cases examined, nearly all allocations for wa-                      Sanitation targets are shown in Table 7; note NAP
ter supply and sanitation are channeled through                            operational targets are completely aligned with
the Dinas Pekerjaan Umum (around 96 percent)                               the RPJMN as the former was updated when
and Kesehatan (three percent). Other offices                                the latter was promulgated. In addition to safe
typically receive less than one percent of sector                          disposal for human wastes (sanitation), NAP also
allocations. While there is much less mandate                              aims to develop centralized sewerage systems
overlap at the local level, because funds also are                         in metropolitan and large urban areas.
more constrained, dissipating efforts across too
many institutions with too few resources is an                                                                    Table 7.
issue for local governments.                                                                         GoI Sanitation Targets

                                                                                        Water Supply Access* Targets RP JMN                NAP      NAP
                                                                                                                      2009                 2009     2015


4. National Water Supply and Sanitation                                       Urban                                                        73.74%   71.39%
                                                                              Rural                                                        64.50%   78.82%
   Strategies                                                                 Total                                                          69%    75.34%


Recently, GoI articulated its overall direction for                           Operational Targets

the water supply and sanitation sector through a                              Open defecation free*                                100%     100%     100%
                                                                              IPLT and IPAL Use Capacity                            60%      60%
medium-term development plan (Rencana Pem-                                    Reduce Domestic Water Pollution                       50%      50%
bangunan Jangka Menengah Nasional - RPJMN,                                    * Households at least have a safe disposal for human waste

2004-2009). Before the RPJMN process com-
menced, the Ministry of Public Works (Departe-
men Pekerjaan Umum - PU) already had started                               GoI’s strategies establish a consistent set of prin-
to develop its individual national action plans                            ciples and activities that can form the basis of a
(NAPs) for water supply and sanitation.                                    common sector priority or core program of work.
                                                                           In Table 8, these principles have been organized
Both RPJMN and NAPs are fundamentally                                      into eight areas of intervention that correspond
geared toward achieving Indonesia’s MDG tar-                               to the above institutional mandate/responsibility
gets by 2015. But the water supply NAP was                                 matrices (Table 4 and Table 5).
finalized prior to the medium-term plan and its
targets do not completely match the overarching
RPJMN. NAP targets will be adjusted to RPJMN
in accordance with national development plan-
ning system policies. Current NAP and RPJMN
water supply targets are shown in Table 6.

                              Table 6.
                      GoI Water Supply Targets

                                                RP JMN   NAP      NAP
        Water Supply Access* Targets             2009    2010     2015

    Urban                                         66%      90%      93%
    Rural                                         30%    70.75%   77.50%
    Total                                         66%      83%      88%


   Service Level Targets of Projected Total
    Access                                        40%    48.50%     62%
    Pipe water                                    60%    51.50%     38%
    Others


   Operational Targets
    No. of households connected (millions)                19.00    25.40
    Procuction capacity (‘000 liters per sec)            268.00   358.00
   * Refers to piped and non-piped systems




                                                                                                                                 Financing Study Report |    9
                                                                               Table 8.
                              Strategic Areas Articulated in National Water Supply and Sanitation Plans

                                                          RPJMN                                 NAP Water Supply                            NAP Wastewater

  1. Sector Policy and Planning                                                                                                  Strengthen coordination with other sectors

  2. Infrastructure Development and
     Rehabilitation
  2.1. New Infrastructure Develop-         Increase number of PDAMs and PDALs         Develop water supply facilities incre-     Expand coverage of existing wastewa-
        ment                               in metropolitan and big cities             mentally                                   ter facilities and infrastructure
                                           Increase service connections, particu-     Support increased service connec-          Implement program for domestic IPAL
                                           larly for villages                         tions especially in rural and peri-urban   development
                                           Increase sewerage connections              communities                                Support infrastructure development in
                                                                                                                                 disease-endemic areas
                                                                                                                                 Develop infrastructure in disaster areas
                                                                                                                                 Develop appropriate infrastructure in
                                                                                                                                 remote areas and small islands
                                                                                                                                 Develop infrastructure in border areas

  2.2. Rehabilitation of Existing Infra-   Rehabilitate infrastructure destroyed by                                              Rehabilitate existing wastewater facili-
       structure                           natural calamities                                                                    ties and infrastructure
                                           Refurbish water and wastewater
                                           systems built
                                           Replace old trunk and distribution
                                           pipes

  3. Tehnical Assistance to Support
      Program/Project Implementation
  3.1. Develop Pro-Poor Approaches         Ensure participation of communities in                                                Develop wastewater infrastructure for
        to Infrastructure Development      planning, design and construction                                                     low-income community
  3.2. Technology Research and             Improve technology for sewage                                                         Develop program for environmentally-
        Development                        processing                                                                            friendly technology for wastewater
                                                                                                                                 management

  4. Performance Improvement of
      Service Providers (Institutionally
      and Community Managed)
  4.1. Operational Efficiency               Implement leakage reduction program.       Improve quality of drinking water          Assist increased performance of
                                           Optimize idle capacity of water and        distributed                                wastewater infrastructure and facilities
                                           wastewater facilities

  4.2. Service Provider Capacity           Support improved human resources           Support continuing training for PDAM       Improve competence of human
                                           management of service providers            management                                 resources
                                           Revise regulation of local government      Establish separate supervision body
                                           enterprises                                from operations
                                           Support capacity-building programs for
                                           community-based service providers

  4.3. Debt Restructuring                  Implement debt restructuring program       Implement debt restructuring program
                                           for PDAMs.                                 for PDAMs
                                                                                      Encourage local governments to con-
                                                                                      tribute in settling PDAM debt

  5. Sector Institutions Reform
  5.1. Sector Management Organiza-         Form regional/aggregated manage-           Establish management body for water        Establish regulatory institution for
       tion                                ment of water supply.                      resources allocation                       wastewater
  5.2. Tariff Reform                       Revise rules on tariffs to support         Support establishment of cost-cover-
                                           improved cost-recovery                     ing trariffs



  6. Administration and Enforcement                                                   Institute rewards and penalties to         Review and improve regulations on
     of Regulations                                                                   encourage water conservation               wastewater management
                                                                                                                                 Develop regulatory and technical
                                                                                                                                 standards & guidelines for wastewater
                                                                                                                                 management
                                                                                                                                 Improve domestic and industrial waste-
                                                                                                                                 water monitoring

  7. Communicarions Program                Launch public campaign on impor-           Implement school-based education           Implement environmental education
  7.1. Hygiene Promotion                   tance of clean and healthy living          program                                    and sanitation campaigns in local
                                           Implement school-based hygiene                                                        forums.
                                           campaign                                                                              Implement the community-led total
                                           Increase community participation for       Institute rewards and punishment for       sanitation program
  7.2. Water Education                     environmental conservation                 conservation


  8. Promoting Increased Investments
  8.1. Private Sector Participation        Review and revise regulations to           Review and revise regulations to           Identify business opportunities for
                                           increase private participation             increase private participation             sanitation service providers

  8.2. Facilitate New Sources of           Encourage participation from NGOs          Encourage local governments to invest      Encourage local governments
       Financing/Innovations                                                          in sector                                  participation in wastewater facilities
                                                                                      Promote cooperation between local          development
                                                                                      governments on water provision             Implement a program for extensifying
                                                                                      Encourage increased community              wastewater financing
                                                                                      investment




10 | Financing Study Report
While infrastructure development and service           their amenability to performance-based financ-
delivery are articulated priorities, the strategies    ing.
demonstrate agreement, indeed an emphasis,
on sector reform programs as sector reform has
come to be viewed as a key objective.                  5. Financial Policies

The strategy development process, however,             Two groups of financial policies – in effect during
is still incomplete. Both sets of documents are        the period of review (2003-2005) as well as those
vague on defining the priority minimum service          with prospective application to sector financial
and reform program package, and on assign-             planning – are relevant to this study. The first
ment of responsibilities. Some strategic areas         group includes policies that direct, or influence
need further development. Ideally, sector strat-       the direction of, public financing for water sup-
egies should reflect a choice already made on           ply and sanitation. The second group of policies
a specific course of action among a number of           relates to budget and planning frameworks.
options even if some options, for example, for
“extensifying” sources of financing for sanitation,
are not fully known. Some important mandates           5.1.   Public Financing for Water Supply
also have been overlooked – such as supporting                and Sanitation
capacity of local governments for sector devel-
opment planning and monitoring.                        The sector draws financing for its activities from
                                                       the following major sources of public funds.
As a step in completing the strategy exercise,
GoI, particularly national government could con-
sider agreeing and supporting a minimum level          5.1.1. Budget allocations by national gov-
of service for water and sanitation to be avail-              ernment agencies
able for all Indonesians and prioritizing a core set
of reforms. This minimum level of service takes        National ministries, with responsibility for the
an approach to prioritization that emphasizes          sector, finance their annual work plans through
‘some for all’ instead of ‘all for some,’ and based    the national budget (Anggaran Pendapatan dan
on strategy development experience elsewhere,          Belanja Nasional - APBN). Because responsi-
facilitates investment planning exercises, and         bility for water supply and sanitation has been
more importantly, improves the likelihood of im-       decentralized to local government, infrastruc-
pact because of its ability to consolidate efforts     ture investments are not expected to be part
of all involved institutions. Various parts of GoI     of national government plans. However, local
can make a commitment towards achieving this           governments that cannot fulfill their mandates
minimum package, perhaps defined according              for sector development may receive assistance
to Indonesia’s MDGs targets, but likely differenti-    from national government for low income/poor
ated between rural, low and high density urban         areas that are not served by local or nationally-
areas and a set of priority reform programs.           owned water enterprises. There are a number of
                                                       funds channels by which this can be achieved,
From this agreement, a sector investment plan          not excluding direct implementation by national
can be developed, which would define what and           government.
how resources are going to be allocated to pur-
sue these targets over a period of time. Public        APBN can finance delegated responsibilities
financing, particularly, transfers from higher to       through “deconcentration” funds (Dana Dekon-
lower levels of government, could be earmarked         sentrasi) and co-administration funds (Dana Tu-
to support these priority activities. Prioritization   gas Perbantuan). Both funds are allocated to
and predictability of financing from national gov-      national ministries; although the program is man-
ernment would be a key lever for directing lo-         aged by central departments of government,
cal government action in the sector and improve        work is conducted at the local level – prov-



                                                                                  Financing Study Report |   11
ince and kota/kabupaten, respectively. Neither         and cities out of received DAK allocations for
source of funds is included in local budgets, al-      water supply. A fiscal capacity filter is applied so
though local government designates a counter-          that only needy districts are eligible. Special eli-
part work unit (budget user) accountable for the       gibility criteria also are established by law. Sec-
completion of activities.                              tor line ministries set technical standards of pro-
                                                       posals that will be eligible, and specify types of
The law on Fiscal Balance specifies Dana Dekon-         allowable expenditure. DAK regulations can be
sentrasi is to fund activities that are non-physical   revised annually and sector allocations are not
in nature, whereas Dana Perbantuan is allocated        guaranteed for multiple years. Indeed, current
for physical works only. Ownership of property         DAK regulations indicate that projects must be
purchased with these funds remains with the na-        completed within one year.
tional government, and with it, the responsibility
to administer or maintain such property, unless        5.1.3. Loans by national government
an explicit donation is made. Government fi-                   on-granted to local governments
nance planners also note that because of its hy-
brid nature, accountability for the funds is hard      National government agencies can on-grant
to exact either from the center or districts. Al-      funds from overseas loans to local governments
locations for water supply and sanitation through      with relatively lower fiscal capacity as established
these special funds are made annually and not          by regulations. These grants may not be used for
guaranteed year-on-year.                               project administration or local government coun-
                                                       terpart financing. According to PMK129/2005,
                                                       local governments should provide counterpart
5.1.2. Budget allocations by local govern-             funds in relation to their fiscal capacity.
       ments
                                                       On-granting usually is part of a national initiative;
In addition to allocations of local revenues for the   for water supply and sanitation, these initiatives
sector, local governments also have access to          can be through either sector-specific or multi-
national revenues earmarked for specific prior-         sectoral projects such as urban development,
ity sectors and activities established by the Gov-     or through community driven development pro-
ernment, through Bappenas. Special allocation          grams. In the period under review only a few
funds (Dana Alokasi Khusus – DAK) are counted          major on-granting programs supporting water
as revenues in the local budget, and allocated         supply and sanitation have been identified.
and accounted through the regular local bud-
get process. DAK allocations for water supply          These include the following World Bank-funded
started only in 2005 (IDR 203 billion). In 2006,       projects:
this amount will triple to IDR 608 billion. DAK
allocations in 2006 also include IDR 112 billion       • Water Supply for Low-Income Communities
for environmental health, which may be used              (WSLIC) – discussed under Ministry of Health
for sanitation-related activities. DAK allocations       below
comprise only a miniscule portion of total local
government revenues. For example total 2005            • Kecamatan Development Project – Since the
DAK for all sectors do not make up more than             project began in 1999, IDR 470 billion has
9% of local revenues, and DAK allocations for            been invested in water supply (including piped
water supply ranged from less than 0.1 to 0.4%           water) and public toilets. A majority of invest-
of local revenues.                                       ment (77%) was for water supply.

DAK is a conditional grant, with local govern-         • Urban Poverty Project (UPP) – The second
ments usually required to contribute 10 percent          phase of UPP started in 2003 and up to the
of project costs. Not all local governments are          current year, IDR 14.4 billion has been spent
eligible to receive DAK. In 2005, 218 districts          on water supply, sanitation, solid waste and



12 | Financing Study Report
  drainage. More than half of this was allocated      their owner, the “no arrears” requirement applies
  to drainage and about 10 percent to water           both to the local government owner and the en-
  supply.                                             terprise. Since 2000, there have been created
                                                      87 new local government units. These are also
Other sector projects include:                        not allowed to borrow, if the one from which the
                                                      newly created local government split off, is in ar-
• Denpasar Sewerage Development Project -             rears to the central government.
  US$45 million on-granted to Denpasar from
  a Japan Bank for International Cooperation
  loan to the Ministry of Public Works                5.1.5. Other sources from national
                                                             government revenues

5.1.4. Loans directly made by local govern-           There are other less clear sources of financ-
       ment agencies                                  ing for public infrastructure allocated from the
                                                      APBN. The Anggaran Belanja Tambahan (ABT),
Local governments have the ability to borrow for      or additional expenditure budget, may be used
activities within their mandate, with borrowing       to augment infrastructure development funds,
limits established by Ministry of Finance regula-     but this study has not determined whether any
tion. For long-term loans the financial limits are:    allocations have been made specifically for wa-
                                                      ter supply and sanitation.
• Outstanding debt must not exceed 75 percent
  of total revenue in the local budget (APBD) in      Also, in 2005, as part of the windfall from re-
  the previous year                                   ducing oil subsidies, Government launched an
• Based on annual projections of local revenue        Oil Subsidy Compensation Program (Program
  and expenditure, the debt service cover-            Kompensasi Pemberian Subsidi Bahan Bakar
  age ratio (DSCR) must not be less than 2.5.         Minyak), with an allocation of IDR 3.342 billion for
  DSCR is defined as the ratio of the sum of re-       village infrastructure programs. Each participat-
  gional income and the sum of debt (including        ing village would receive IDR 250 million to spend
  amortization of principal, interest and other       on, among others, water supply infrastructure.
  fees coming due in the relevant year)               These funds are allocated to the national line
                                                      ministry for their direct implementation.
The Ministry also establishes ceilings on the total
annual debt incurred by local governments na-         There are numerous channels of public funds in
tionwide.                                             the sector; however, except for local government
                                                      budget allocations that are based on a medium-
Local governments are prohibited by law from          term framework and for cases where financing
borrowing directly from overseas sources and are      is derived from loans, none of the present fund
able to access bilateral, multi-lateral financing or   channels are guaranteed beyond their annual
financing from international banks only through        allocation. There also are many funds that are
on-lending from the national government. These        “off-budget” from the perspective of local gov-
loans are available only for revenue-generating       ernment, despite it having primary responsibility
projects. During the period under review (2003-       for water supply and sanitation. These factors
2005), there was no on-lending for water and          combine to create challenges for the more ra-
sanitation projects.                                  tional and longer-term planning that is critical for
                                                      water supply and sanitation, which is character-
Recent regulations also deny new loans for lo-        ized by large multi-year investments. Too, the
cal governments with arrears from previous bor-       unpredictability of flows makes it difficult to en-
rowings. Because local government-owned               force hard budget constraints and to hold local
enterprises, such as PDAMs, are not allowed           institutions duly accountable.
to borrow on-lent funds directly, only through



                                                                                  Financing Study Report |   13
5.2. Public Financial Planning and Budget-              to ensure synergies and promote accountability
     ing Policies                                       through a regular process of planning and re-
                                                        view. This approach would outline core strategic
In the years following decentralization, GoI has        policies and programs, and the roles of relevant
updated its regulations on public financial bud-         institutions, for the water and sanitation portion
geting and reporting on an almost yearly basis.         of the medium-term development plan.
One of the most significant changes in budget
reporting was between 2003 and 2004, when                                 Table 9.
                                                         Comparison between Budget Reform Policies
reporting switched from by sector programs to                       and Practice in WSS
by work units (or department budget users).
This change has made comparability difficult                        Incompatibilities between Budget Reforms and
                                                                         Present Practices in WSS Financing
between previous and current years and also                 Pillars of Budget Reforms          Present WSS Financing
caused confusion among local governments.6
                                                         Unified budget so that all funds    Number of ‘off budget’ activities,
                                                         can be accounted and monitored     especially from the perspective
Nevertheless, the current development planning                                              of local governments who have
                                                                                            primary responsibility
and budgeting policies summarized in Table 10
are much improved, emphasizing integrated and            Performance-based budgeting        Achievement of WSS outcomes
performance-focused budgets, based on a lon-             needs to clearly define the links   or their non-achievement cannot
                                                         between inputs (allocations) to    easily be attitude to one agency
ger-term view of development. The new process            outputs and outcomes to ensure     since the sector involves multiple
introduces long- and medium-term development             budget effectiveness               levels of government and agen-
                                                                                            cies
planning at national and local levels as the basis
for annual budget proposals. The current poli-                                              There is no sector-wide ‘con-
cies also contemplate the introduction of a me-                                             tract’ or strategy that allocates
                                                                                            responsibilities and funding
dium-term expenditure framework, with future                                                accountability among the various
budget ceilings for budget users.                                                           stakeholders

                                                         Medium-term expediture             Most financing is annual rather
However, the processes of planning and bud-              framework (MTEF) for longer-       than multi-year and there is no
geting are overly detailed and formal, resulting in      range and realistic planning       MTEF for sector.

tardiness and their poor translation into practice.
Information on actual expenditures are difficult         A step or process will need to be introduced
to access because documentation of budget               within the current framework to allow cross-
changes tend to be cumbersome and therefore,            institutional planning. Such an approach already
avoided.                                                is contemplated in PP 16/2005 (implementing
                                                        the Water Resources Law No. 7 2005), when it
Too, the current framework does not support             calls for a national drinking water supply7 devel-
sector-wide planning. The only opportunity to           opment policy and strategy to be formulated by
develop sector plans is as part of the strategic        Government every five years. However, it would
development plan for the whole government,              be much more useful to link this process to the
which includes all sectors. Detailed sector costs       budgeting framework so that trade-offs among
and resource requirements are developed only            policy options become explicit (because of bud-
by individual work units within ministries and lo-      get constraint) and expenditures are linked to
cal governments, and only through an annual             achievement of program outputs in the short-run
process.                                                and outcomes in the long-run.

For sectors with unilateral mandates, this could
be sufficient, but for sectors such as water sup-        6 In 2004, only half of local governments submitted expenditure
                                                          reports to the Ministry of Finance. Among those who made
ply and sanitation that span many units and in-           submissions, half reported in the old format and the rest used
stitutions, introducing a sector investment and           the new formats.

expenditure framework process could be benefi-           7 Note that while regulations only speak of “drinking water sup-
                                                          ply,” the general policy of the law also promotes integrated
cial in coordinating activities of different agencies     development of sanitation.




14 | Financing Study Report
This approach would be consistent with perfor-
mance-based budgeting policies being intro-
duced in government. Current planning policies
call for more systematic budget performance
reviews of achievements (outcomes), unit price
standards and minimum service standards. This
oversight can be coordinated by state agencies,
such as Bappenas, whilst leaving implementa-
tion and operational approaches to budget us-
ers (technical ministries or local government
work units) based on an agreed sector program
of work.




                                                  Financing Study Report |   15
                                                                            Table 10.
                                                               Planning and Budgeting Framework

                                             Period
              Document                        (Yrs)                                Content                                         By Whom                          By When

    RPJP                                       20       Elaborates goals, vision, missions and direc-                       National Goverment 1 year before
    Long-Term National                                  tion of national development and state ad-                          Preparation Coordi- current plan expires
    Development Plan                                    ministration as per the Preamble ot the 1945                        nated by Bappenas
                                                        Constitution

    RP JPD                                     20       Contains vision, missions and directions of                         Local Government               1 year before
    Long-Term Regional                                  regional development based on national long-                        Preparation Coordi-            current plan expires
    Development Plan                                    term development plan                                               nated by Bappeda


    RP JMN                                      5       Elaborates vision, mission and programs of                          National                       Within 3 months of
    Medium-Term National                                the President. Contains national development                        Government                     President taking up
    Development Plan                                    strategies, general policies, programs of minis-                                                   office
                                                        tries/institutional, interministerial, regional and
                                                        teritorial programs, macro-economic frame-
                                                        work covering directions of fiscal policies

    RP JMD                                      5       Elaborates vision, mission and programs of                          Local                          Within 3 months
    Medium Term Regional                                the head of region by referring to the national                     Governments                    from inauguration
    Development Plan                                    medium-term plan. Contains the directions of                                                       of head of local
                                                        financial policies, regional development strat-                                                     government
                                                        egies, programs of the regional working units
                                                        and inter-regional working unit programs and
                                                        indicative regulation and funding framework

    Renstra-KL                                  5       Contains vision, mission, objectives, strate-                       Per Ministry /
    Medium-Term                                         gies, policies, programs and activities as per                      Institution*
    Development Plan                                    the mandate of the ministry/institution and is
    of the Ministry                                     based on the

    Renstra-SPKD                                5       Contains vision, mission, objective, strate-                        Per Regional Work
    Medium-Term Plan                                    gies, policies, programs and activities as per                      Unit
    of Local Departments/                               the mandate of the regional working unit and is
    Work Units                                          based on the local government medium-term
                                                        plan.

    RKP                                         1       Elaborates on the national medium-term                              National
    Annual National                                     plan and collates individual ministries’ annual                     Government
    Development Plan                                    plans.

    RKPD                                        1       Elaborates on the regional medium-term plan                         Regional                       By May
    Annual Regional                                     and contains regional economic framework,                           Government
    Development Plan                                    priorities, action plan and funding. It collates
                                                        the annual plan of individual work units and
                                                        forms the basis of the Local Revenues and
                                                        Expenditure proposal (budget proposal) to the
                                                        local essembly.

    Renja-KL                                    1       Contains the work plan of units within the                          Per Ministry /                 Prepared by mid-
    Annual Plan of Ministry                             ministry and the costs of their program and                         Institution                    July; approved into
                                                        activities. The various plans are collected and                                                    law after national
                                                        reviewed by the executive and are included in                                                      budget is passed
                                                        the national budget proposal to the national as-
                                                        sembly.

    Renja-SPKD                                  1       Contains the individual work plan of local work                     Per Local
    Annual Plan of Local                                units and includes the costs of their programs                      Department/
    Department / Work Units                             and activities.                                                     Work Unit

    APBN                                        1                                                                           DPR -                          By October
    National Revenues and                                                                                                   National Assembly
    Expediture
    (Budget)

    APBD                                        1                                                                           DPRD - Local                   No later than 1
    Local Revenues and                                                                                                      Assembly                       month before the
    Expediture                                                                                                                                             new budget year

    DPA                                         1       Based on the approved annual plan and bud-                          Per Ministry /                 By end December
    Budget                                              get.                                                                Institution
    Implementation Documents
    by Ministries

    DPA-SKPDs                                   1       Based on the approved annual plan and bud-                          Per Local                      Within 6 days of
    Budget Implementation                               get.                                                                Department/                    being notified of
    Documents by Local                                                                                                      Work Unit                      the approval of
    Departments/Work Units                                                                                                                                 the APBD
* Institutions are non-state ministry organizations that are established to execute tasks on the basis of the Constitution or other laws and therefore, receive budget allocations.




16 | Financing Study Report
6. Budget Trends for Water Supply and                                                 Figure 1.
                                                                          Local Budget Allocation for WSES
   Environmental Sanitation (WSES) 2003-                                         by Expenditure Type
   2005
                                                                                 0%
                                                                          8%
                                                                   2%
6.1. Local Investment in Water Supply and
     Environmental Sanitation
                                                                                                        Capital


As shown in table 11, average local investment                                                          Technical Assistance
in Indonesia’s water and environmental sanita-
tion sector (water supply, sanitation, solid waste                                                      Project Support and
                                                                                                        Maintenance
and drainage; or WSES) for WASPOLA partici-
                                                                                    90%                 Socialization and
pants is highest for cities and lowest for districts,                                                   Capacity Building
in terms of total IDR, participating cities invest
the highest amount per capita, while provinces
invest substantially less per capita than either                The split between capital and operational (that
districts or cities, even though provincial revenue             is, non-capital) allocations in local budgets for
is much greater than direct revenue.                            WSES is markedly different from overall local
                                                                budgets, where capital allocations are only about
                  Table 11.                                     one-quarter of the allocation for operational ex-
Average WSES Budget Allocation and Average Local
         Revenues in WASPOLA Areas                              penditures.

             Ave. WSES Budget           Ave. Total Local        When individual government allocations are ex-
                                          Revenues
                                                                amined, the difference between capital and op-
            in million      IDR       in million      IDR
               IDR       per capita      IDR       per capita   erational allocations is even stronger. As shown
                                                                in Table 12, several local government budgets
Districts       1,689        6,162      748,804      475,790    have allocations for capital investments, but zero
Provinces       3,071          661    2,669,782    1,619,314    funds allocated for operational expenditures.

Cities          4,611       30,251      469,379    3,825,743
                                                                                   Table 12.
                                                                Local Governments with Capital Allocations but No
The vast majority of local WSES budget alloca-                      Operational Budget Allocation (2003-2005)
tions, about ninety percent, are for capital in-
vestment. Only minor amounts are allocated for                    Year                     Local Governments
technical assistance, and project support and                      2003        Provinces: Banten and Gorontalo
maintenance (see Figure 1).                                                    Districts: Kebumen, Pekalongan and Sawah
                                                                               Lunto/Sijunjung
Capital investments for water supply include                       2004        City: Pangkalpinang
                                                                               Districts: Pekalongan, Pohu Wato, Sawah
source development, installation of pumps and                                  Lunto/Sijunjung and South Bangka
distribution pipes or their rehabilitation. Capital                2005        Province: Banten
investments in sanitation comprise mostly the                                  City: Pangkalpinang
                                                                               Districts; Selayar and Bone Bolango
construction or rehabilitation of public toilets
(MCK) and rehabilitation of IPLTs.

Hygiene hardly featured in the local budgets,                   Budget allocations by provinces, districts and
except for allocations towards the maintenance                  cities participating in the WASPOLA project also
of sanitation clinics (information center) in Tanah             have been classified by WSES sub-sectors.
Datar, Western Sumatra, totaling IDR 7.6 million                About half of province and district WSES budget
in three years.                                                 allocations are for water supply. In city budgets
                                                                however, water supply is a comparatively minor
                                                                share; the largest city budget WSES allocation,



                                                                                                 Financing Study Report |     17
about 80 percent, is for drainage. (Cities are un-                                 tions can be expected to increase for WASPO-
derrepresented in the study’s local government                                     LA participants, WSES strategies were adopted
database; their population is less than one per-                                   by participating governments only in 2005, and
cent of the total population of WASPOLA partici-                                   hence any budget consequences are beyond
pants.) Allocations for solid waste are a minor                                    the data for this study.
share of WSES budgets at all levels of local gov-
ernment, at most reaching only five percent of                                                              Figure 3.
                                                                                         Local Government WSES Allocation (Per Capita)
WSES in city budgets. Sanitation receives about                                                           2003-2005
one-fifth of total local budget allocations for wa-                                       45,000
ter supply, but this proportion varies markedly
                                                                                         40,000
across government levels. In district budgets,
sanitation allocations are only about six percent                                        35,000

of that allocated for water, yet in province and
                                                                                         30,000
city budgets, sanitation is allocated roughly half
the amounts for water. These results are shown



                                                                                   IDR
                                                                                         25,000

in Figure 2.
                                                                                         20,000


                     Figure 2.                                                           15,000
       Local Government Budget Allocations by
                 WSES Sub-sector                                                         10,000

100%
                                                                                          5,000


90%                                                                                          0
                                                                                                  2003     2004      2005     2003     2004       2005   2003    2004    2005

80%                                                                                                      Districts                   Provincies                 Cities
                                                                                                                            Local Government Level

70%                                                                                                             Water         Sanitation          Other WES


60%
                                                                                   The study also examined the relationship be-
50%                                                                                tween regional revenue, gross regional domestic
                                                                                   product (GRDP) and WSES budget allocations.
40%
                                                                                   For each level of government, regional revenues
                                                                                   are the sum of local government’s own revenue
30%
                                                                                   from taxes, duties and state owned enterprises;
20%                                                                                plus equalization funds, including revenue shar-
                                                                                   ing of taxes and natural resource income, and
10%                                                                                general (DAU) and special (DAK) allocation funds.
 0%
                                                                                   Increases in regional revenue might be expected
         All Levels         Provinces             Cities
                                Levels of Governments
                                                                    Districts      to yield increased WSES allocations, but only a
                      Water Supply    Sanitation    Solid Waste   DrainageSupply   weak correlation (0.14) was found. Further, there
                                                                                   was almost no correlation (0.05) between WSES
Although sampled provinces, districts and cities                                   allocations and GRDP.
participate in the WASPOLA project, no discern-
ible trend was observed in their overall WSES al-
locations or in sub-sector amounts. Total WSES
allocations declined slightly in district budgets in
2004, but increased in province and city bud-
gets. This trend was reversed in 2005, when
WSES allocations decreased in province and city
budgets, and increased in district budgets (see
Figure 3). While over time, WSES budget alloca-



18 | Financing Study Report
 6.2. National Investment in Water Supply                                                                       as shown in Table 13 below. There is opportu-
      and Environmental Sanitation                                                                              nity, therefore, for national government agencies
                                                                                                                to better leverage funds from the local govern-
 6.2.1. WSES Allocations from the Ministry                                                                      ments.
        of Public Works
                                                                                                                                      Table 13.
                                                                                                                        Sub-Sector Allocations for 2003-2005
 In addition to analyzing local budget allocations                                                                              in WASPOLA Areas
 for WSES, the study examined allocations by the
 sector’s key line ministry, Public Works (Peker-                                                                             By Ministry of     By Local
                                                                                                                                                                     Local
                                                                                                                                                                 Allocation as
                                                                                                                              Public Works     Governments        Percentage
 jaan Umum; PU). Public Works allocations to                                                                                                                        of Total

 local governments, both nationally and for WA-                                                                 Water Supply 49,292,425,000     91,008,643,356       65%
 SPOLA participants, largely are for water supply.                                                              Sanitation      925,000,000     20,697,563,605       96%
 Nationally, sanitation is allocated only about 15
                                                                                                                Solid Waste    4,379,282,000     3,660,089,006       46%
 percent of the Public Works allocation for water
 supply, and for WASPOLA participants, sanita-                                                                  Drainage       1,861,903,000    73,102,575,664       98%
 tion is allocated about one-tenth this amount.                                                                 Total         56,458,610,000   188,468,871,631       77%
 These data are shown in Figure 4.
                                                                                                                Finally, Public Works budget allocations were
                             Figure 4.
         Ministry of Public Works Sub-Sector Allocations                                                        analyzed by type of expenditure. As shown in
                (2003-2005) to Local Governments                                                                Figure 5, about two-thirds of Public Works allo-
100%
                                                                                                                cations are for physical investments and most all
                                                                                                                the remainder are for technical assistance, which
                                                                                                                include systems optimization investigations, de-
                                                                                                                tailed engineering design and feasibility studies
  80%
                                                                                                                linked to physical investments. Capital invest-
                                                                                                                ments for water supply mostly comprise laying of
                                                                                                                transmission and distribution pipelines, construc-
  60%                                                                                                           tion of intake tanks and reservoirs, development
                                                                                                                of public hydrants, procurement of pumps and
                                                                                                                electric generators, while for sanitation, capital
  40%
                                                                                                                investments include construction and rehabilita-
                                                                                                                tion of sewerage systems, wastewater treatment
                                                                                                                plants, procurement of sewage tanker trucks,
                                                                                                                pumps and generators. In the three years, PU
  20%
                                                                                                                allocated IDR 408 million on awareness raising
                                                                                                                activities for sanitation. While PU’s concentra-
                                                                                                                tion on physical investments is less than local
   0%                                                                                                           government’s 90 percent, the Ministry clearly
                 Total to      Total to         Total to       Total to           Total to     Total to
             All Provinces      Kota/
                              Kabupaten
                                               All Levels     WASPOLA
                                                              Provinces
                                                                                WASPOLA
                                                                              Kota/Kabupatens
                                                                                              WASPOLA           continues to focus on capital projects more than
Drainage

Solid
              9,039,707,000 140.130,819,000 149,170,526,000    300,000,000     1,561,903,000    1,861,903,000
                                                                                                                sector policy guidance and capacity building.
Waste
             22,204,980,000   48,678,707,000 70,883,687,000   2,318,332,000      985,000,000    3,303,332,000

Sanitation   22,827,265,000 115,490,814,000 138,318,079,000    225,000,000       500,000,000     725,000,000
Water        40,471,003,000 838,050,795,000 878,521,798,000
Supply                                                        8,754,333,000 39,379,490,000     48,133,823,000




 The study also tested for correlation between
 Public Works WSES allocations and those of
 local governments. The relationship was found
 to be slightly positive (0.21). Most funds for all
 WSES sub-sectors, except solid waste, are al-
 located by local governments, not Public Works,



                                                                                                                                                Financing Study Report |   19
                                Figure 5.                                      A much larger portion of MoH support for water
                 Public Works Budget Allocation for WSES
                           by Expenditure Type                                 supply and sanitation, however, is made through
                                                                               the Water Supply for Low-Income Communities
                           1%
                      3%                                                       Project (WSLIC). (See Figure 7.) WSLIC-related
                                                                               allocations dwarf MoH general allocations and
28%
                                                                               comprise about 98 percent of the Ministry’s total
                                                  Capital
                                                                               support for water and sanitation. Every IDR 1
                                                  Technical Assistance         from the WSLIC loan was matched by IDR 0.24
                                                                               allocated from the national budget for project
                                                  Project Support and          and infrastructure support. Including WSLIC
                                   68%            Maintenance
                                                                               support, MoH allocations for water supply and
                                                  Socialization and            sanitation are 40 percent of that allocated by the
                                                  Capacity Building            Ministry of Public Works.

6.2.2. WSES Allocations from the Ministry                                                              Figure 7.
       of Health                                                                        Water Supply and Sanitation Allocations
                                                                                                     by Ministries

The Ministry of Health is the second largest min-                              1,200,000,000,000


isterial channel of funds for water and sanitation,                            1,000,000,000,000
but much less significant than Public Works. In
the three-year period, MoH general budget al-                                   800,000,000,000


locations for water supply and sanitation came                                  600,000,000,000
to less than one percent of amounts allocated
by PU, and MoH’s allocation has decreased over                                  400,000,000,000


the sample period. MoH general budget allo-                                     200,000,000,000

cations for WSES are shown in Figure 6. MoH
                                                                                              0
funding for sanitation on the other hand exceeds                                                          MPW    Ministry of Health

PU’s contribution. Sanitation allocations com-                                                                       General sector
                                                                                                                     allocation 2%
prise wastewater facilities, sanitation emergency                                                                              Budget support for
                                                                                                                               WSLIC 19%
response systems and a significant portion (IDR
2.26 billion, or about 1.2 times that of sanitation
capital investments) is allocated for hygiene pro-                                                 Loan funds
motion. No MoH funds are allocated for drainage                                                    under WSLIC
                                                                                                   79%
or solid waste.

                           Figure 6                                            A larger portion of MoH funds is allocated for
    Ministry of Health General Budget Allocations for WSES                     physical investment compared with Ministry of
               6000                                                            Public Works (75 percent versus 68 percent).
                                                                               One-fifth of the MoH budget for water and sani-
               5000
                                                                               tation is allocated for project administration and
               4000                                                            support and only a small portion, mainly from
                                                                               general budget allocations, is earmarked for
 IDR million




                                                                               technical assistance, socialization and capacity-
               3000



               2000                                                            building (see Table 14).
               1000


                  0
                            2003         2004                  2005

                                                Water Supply      Sanitation




20 | Financing Study Report
                                  Table 14.                                        are being allocated. Local allocations for WSES,
      Ministry of Health WSES Allocation by Type                                   on the average, comprise less than one percent
                                                                                   of total local revenues and annual allocations for
                 General
                  Budget
                                  Budget
                                Allocations         WSLIC
                                                    Loans
                                                                      Total        the sector average about US$0.40 per person—
                Allocations     for WSLIC
                                                                                   about 0.03 percent of per capita GNP.
Capital        3,232,661,000    23,408,720,278   195,083,966,378 221,725,347,656

Tehnical      10,115,893,000                                      10,115,893,000
Assistance
                                                                                   The low level of investment at local levels is mir-
Project        1,067,454,000    55,790,975,722                    56,858,429,722
Support and                                                                        rored in the national historical budgets. Com-
Maintenance

Socialization 6,704,257,000                                        6,704,257,000
                                                                                   paring the estimates from NAP on the required
and Capacity
Building                                                                           national government investments in water supply
                                                                                   with annual average investments from the Minis-
                                                                                   tries of Public Works and Health, these agencies
6.3. National and Local Government Sup-                                            would have to invest about 14 times more each
     port to PDAMs                                                                 year to meet NAP targets.

From the local governments participating in WA-                                    Any current approximation of required sector
SPOLA, only Western Sumatra Province and                                           investments is bound to be understated due to
Gorontalo district have funds allocated for sup-                                   unmet targets upon which they were based and
port and supervision of PDAMs. Western Su-                                         under estimation of what investments might be
matra allocated about four percent of its total                                    required in developing future water sources for
three-year water supply budget (IDR 206 mil-                                       distribution. What is clear is that investments in
lion) to monitor the 14 PDAMs in the province.                                     the sector will need to increase and outcomes
Gorontalo allocated IDR 112 million to support                                     from such spending will need to improve, in or-
development of a PDAM network master plan.                                         der to achieve Indonesia’s growth and poverty
                                                                                   alleviation goals.
On the other hand, support from national gov-
ernment, through the Ministry of Public Works,
is more significant – comprising nearly half of its                                 7.2.   The composition and trends of sector
expenditure in 2005 and averaging about 30 per-                                           allocations demonstrate increasing
cent over the three years (see Table 15). Most                                            shares from local governments, but
support to PDAMs was in the form of technical                                             there is potential for greater national
assistance – optimization and design activities.                                          direction.

                        Table 15.
     Ministry of Public Works Support for PDAMs                                    Within the study areas, the review finds a dra-
                                                                                   matic shift in the source of sector investment
              Year            Amount in IDR       % of Total Annual PU             from central to local governments, with the latter
                                                   Spending in WSES
                                                                                   financing between 46 up to over 90 percent of
              2003        102,326,778,000                 39.0%
              2004          6,566,734,000                  1.6%                    total sub-sector activities.
              2005        109,701,912,000                 45.4%
          Total 3 Years   218,595,424,000                 28.6%
                                                                                   This demonstrates willingness of local govern-
                                                                                   ments to invest in WSES. However, the study
                                                                                   found only weak positive correlation between lo-
7. Conclusions and Recommendations
                                                                                   cal revenues and GRDP, and allocations for wa-
                                                                                   ter supply and sanitation.
7.1. Current levels of investments are be-
     low what is required to achieve gov-
                                                                                   There is need to influence the direction of local
     ernment sector targets.
                                                                                   resources to the sector. General advocacy on
                                                                                   the benefits of water and sanitation can be use-
Although the current study has not quantified the
                                                                                   ful for generating political support for sector in-
cost of meeting sector targets against funds al-
                                                                                   vestments. However, sector line ministries also
located, it is apparent that insufficient resources



                                                                                                              Financing Study Report |   21
can work with local governments in building their    basic parameters for sector financial planning are
capacity on sector strategy development, plan-       not available to or known by local governments.
ning and program implementation.                     Simple tools can be developed and disseminat-
                                                     ed to support enhanced investment planning for
National government also has the opportunity to      water supply and sanitation:
direct local governments through the provision
of predictable and longer-term transfers based       • Standard cost schedules for minimum ser-
on a clear program priority and on achievement         vice packages and reform programs that
of results.                                            include investment and recurrent costs as
                                                       well as physical and non-physical compo-
                                                       nents. These schedules would include a bill
7.3. Local governments are playing an in-              of materials/inputs and unit costs that can be
     creasingly significant role in sector fi-           adapted to local prices, based on selected
     nancing, but finances and capacities               technical and program options. Options for
     are presently limited.                            developing more sophisticated cost models
                                                       also can be introduced gradually, such as
Local governments are demonstrating interest in        those allowing for “efficiency” analysis, base-
taking up their responsibility for improved water      line cost monitoring or that weights feasible
and sanitation services. However, only very little     options according to non-financial objectives,
is being invested and sector financing is likely        such as impact on the poor.
to continue to be limited by multiple competing
demands. In fact, between 2003 and 2005, a           • Norms for classifying and naming inputs and
number of the local governments under study            activities/outputs. It was found in the study
returned a negative balance between total local        that budget planners often classify inputs/ac-
revenues and expenditures – together making            tivities/outputs differently or misclassify them.
up a total budget deficit of some Rp 710 billion.       For example, rehabilitation costs are some-
                                                       times treated as operating expenses under
Sector financing will also need to be raised from       the “goods and services” classification. For
other sources, most likely, from user payments,        analyzing the composition of allocations, the
participation of the private sector and perhaps        general classification used in this study was
later, through the capital markets.                    found helpful.

Improved fiscal performance and management            • Availability and publication of benchmark
of financing are not the only challenges facing         data, both on input (costs) and total invest-
local governments. The key challenge will be to        ments allows sector institutions at different
ensure progressive improvements and viability of       levels to assess their progress compared
WSES services enough to breed confidence from           with others, can motivate change and can
its potential financiers, including customers, and      alert oversight institutions to areas requiring
to balance public and commercial interests. This       more attention/priority.
entails better sector planning and oversight, as
well as technical and project/utility management     7.5. At the central level, GoI needs to com-
capabilities that may not be currently available.         plete the strategy development pro-
                                                          cess via a broad-based (inter-Ministry)
                                                          agreement on a minimum service and
7.4. Capacity of sector institutions to de-               priority reform package with a view
     velop realistic investment plans can                 to increasing overall sector spending
     be enhanced with simple tools                        and improving effectiveness.

In conducting this review and based on feedback      The increases in historical investments by nation-
from local governments, it became apparent that      al government and creation of new lines of dedi-



22 | Financing Study Report
cated funding for water supply and sanitation,          Key sector policy-makers and stakeholders will
e.g., DAK, indicate recognition of WSES’ grow-          need to pursue this minimum service and reform
ing in importance. On the other hand, the need          package within a specified timeframe, say, up to
to use national funds to leverage other sources         2010. The agreement would be published and
of financing becomes more important in the face          communicated to sector stakeholders, particular-
of the rising significance of local financing.            ly the local governments, donor community and
                                                        other financiers; and overall progress reviewed
At the central level, progress needs to be made         by Bappenas and the Ministry of Finance.
towards defining and agreeing a minimum ser-
vice and priority reform package and defining the        7.6. Need for clarity on the responsibilities
roles to be played by key agencies in order to               of levels of government, particularly
consolidate central level action and resources.              between province and districts/cities

The common strategic priorities under RPJMN             Developing a sector investment plan, as de-
and NAPs can be a starting point, but the exer-         scribed above, is inextricably linked to establish-
cise should seek to validate the relative signifi-       ing a new mode of functional and fiscal arrange-
cance of the strategic areas to conditions at local     ments between national and local governments
levels and at this level, define targets. This con-      defined in the context of decentralization and in-
sensus development process could be initiated           creasing local fiscal authority and accountability.
by Bappenas and conclude with an inter-Ministe-         In this context, the role of the province needs to
rial memorandum of agreement embodying the              be more clearly defined vis-à-vis districts and cit-
minimum service and priority reform package.            ies. Some provinces have already shown leader-
Because of the large numbers of provinces and           ship by initiating sector planning and supporting
districts in the country, the national government       priority programs through co-financing or block
could consider a process of representation from         transfer systems. The province also has a role to
local governments that would be involved in the         play in sector oversight and coordination within
initial priority setting discussions and allowing for   their jurisdiction.
local adaptation during implementation.
                                                        7.7. Current system of information on pub-
The memorandum of agreement would cover the                  lic financing for WSES faces the fol-
division of roles among the various institutions/            lowing key challenges in its ability to
departments/units in delivering or implementing              support policy/program reviews and
this service and reform package, including iden-             development:
tifying the lead agency at national and at local
levels. Following this consensus, the interven-         • Financial reviews for the sector require a com-
tion packages can be detailed by technical and            plementary process of collation and analysis
implementing units from local governments de-             because sector information is spread across
partments and line ministries.                            many budget units and levels of government;
                                                          regular public financial reporting is aggre-
A sector investment plan can be developed over            gated according to budget users (ministries,
a medium term framework on this basis, and,               departments and directorates) and not by
together with the memorandum of agreement,                sector.
provide overall guidance to the sector and form a
stronger basis of sector coordination and perfor-       • The ability to assess the quality of sector
mance monitoring by oversight institutions such           expenditure is presently limited because (i)
as Bappenas with support from the Ministry of             financial data reported are largely forward-
Finance. In this way, the sector investment plan          looking, i.e., budget allocation information is
then becomes a key policy instrument by which             available, but expenditure data, where avail-
priorities are made in relation to how public re-         able, usually mirrors allocations and (ii) quality
sources will be allocated.                                of local government monitoring of even ba-



                                                                                    Financing Study Report |   23
    sic sector outcomes, e.g. coverage of water
    supply and sanitation, is highly variable. In    To enable national allocations to have a more
    addition, information on some public funding     catalytic role, counterpart funding requirements
    sources, for example, ABT, is not available.     from local governments for capital investment
                                                     projects (currently between 0-10 percent of proj-
Institutions at relevant levels should be assigned   ect value) could increase, and policies on the
to report, collate and analyze sector finance and     ownership and responsibility for maintenance of
performance on a regular basis and resources         capital created using national funds should be
should be made available to support this activity,   clarified. The merits of paying out grants on the
including audits of representative samples. Com-     basis of outcomes achieved also can be consid-
paring levels of investments against revenues or     ered.
GRDP over time and across levels of govern-
ment could be instituted relatively easily. More     7.9.   More national resources should be
comprehensive reviews on outputs/outcomes                   allocated towards local institutional
can be undertaken for medium-term periods so                strengthening and capacity-devel-
as not to be burdensome, and complemented                   opment for sector planning and pro-
by briefer reviews in sector audits carried out by          gramming.
an oversight body.
                                                     At present, national allocations to the sector are
7.8. Channels of national funds for water            overwhelmingly earmarked for physical construc-
and sanitation currently have a short-term           tion activities. More attention needs to be paid
(annual) period of implementation and can-           to developing local capacities for sector plan-
not be guaranteed year-on-year. Moreover,            ning and implementation. National institutions
except for DAK and on-granted funds, from            will need to focus increasingly on supporting
the point of view of local governments,              local government sector progress through up-
transfers from Dana Dekonsentrasi and                stream analytical work and policy development,
Perbantuan are “off budget.” These fac-              research, and systems for sector monitoring and
tors potentially dissipate local capacity for        evaluation.
maintaining and supporting programs dur-
ing implementation.
                                                     7.10. Local spending on maintenance and
Sector allocations through DAK, Dekonsentrasi              ‘software’ needs to increase propor-
and Dana Tugas Perbantuan cannot be assured                tionately to secure the endurance
for multiple years. Predictability of funding is           and effectiveness of capital invest-
important for planning, particularly of long-ges-          ments made.
tating capital investment projects such as water
supply and sanitation. While budgets cannot be       Even more than national allocations, physical
guaranteed for future years, a medium-term sec-      construction dominate a local allocations to the
tor investment plan, estimating amounts needed       sector. There is apparently not enough being set
to be allocated to the sector, would be useful       aside for maintenance and other activities that
guidance for local and national governments.         are critical to ensuring water and sanitation in-
                                                     vestments achieve their outcomes – for exam-
Allocations from national government are not ex-     ple, hygiene awareness.
pected to be the principal source of financing for
the sector, but instead to stimulate sector de-
velopment by local government and to support
lower income local governments. Indeed, na-
tional transfers currently comprise less than 10
percent of allocations in the WSES sector.




24 | Financing Study Report
7.11. Different types of long-term financ-
      ing need to be made available to local
      governments and locally-owned enter-
      prises demonstrating varying levels of
      readiness and responsibility.

Current local government investments, while in-
creasing, cannot fund large and longer-gestating
investments. Long-term financing still needs to
be available as a source of capital, otherwise re-
quired investments will be put off. Although pru-
dence in local financing is a legitimate concern,
as long as local governments are not presented
with viable options for long-term financing, this
will likely have a contracting effect on the sector.


8. Next Steps on Finance Strategy

The following broad steps have been identified
as necessary to move the sector finance strat-
egy process forward. These key activities need
to be discussed and agreed with GoI and time-
tables assigned based on those discussions.

• Consultations among Bappenas, Ministry of
  Finance, Ministry of Public Works, and Minis-
  try of Health about study findings
• Discussion of developing a sector memoran-
  dum of understanding on a minimum service
  and priority reform package to be led by Bap-
  penas
• Sharing of study results with and seeking in-
  puts from local governments on their views
  about what support they seek from national
  government; sharing of good practices from
  local governments in sector investments and
  sector strategy development
• Development of situation self-assessment and
  strategy guidance notes and process for local
  governments to serve as inputs into national
  WSES program development
• Development of sector investment plan with
  unit costing of policy packages




                                                       Financing Study Report |   25
                                                          Annex 1.
                              List of National Institutions Involved in WSS and their Roles


1. Bappenas                                                    5. Ministry of Home Affairs
a. Directorate for Human Settlements – coordi-                 a. Administration Office for Local Financing
   nation and investment policy and planning for                  (Bina Administrasi Keuangan Daerah), – pol-
   housing/settlements sector                                     icy/regulations on state-owned enterprises,
b. Directorate for Water Resources – coordina-                    which include PDAMs
   tion and investment policy and planning for                 b. Directorate for Spatial Planning and Environ-
   water resources conservation, development                      ment – general integrated land use/spatial
   and management                                                 planning and regulation, including water re-
c. Directorate for Environment – coordina-                        sources management; technical assistance
   tion and investment policy and planning for                    to do those planning
   ‘brown’ sectors, including solid waste and
   sanitation                                                  6. Ministry of Environment
d. Directorate for Health – coordination and in-               a. Directorate for Small Enterprises and Domes-
   vestment policy and planning for health sec-                   tic Pollution Control – technical assistance,
   tor                                                            program implementation on rating, regula-
                                                                  tion, some infrastructure e.g. laboratories for
2. Ministry of Finance                                            water quality testing
a. Directorate for Financial Institutions – financ-             b. Directorate on Conservation – water resourc-
   ing windows through subsidiary loans                           es management
b. Directorate for Budget and Treasury, Local                  c. Directorate on Supporting Units – activities
   Government Finance - policies on local bor-                    on environmental financing such as pollution
   rowing and grants                                              or water users’ fees
c. Directorate for Budget and Treasury, Budget
   1 Office on Sector Services – broad ceilings                 7. Ministry of Mining – licensing of ground
   on budgets                                                     water abstraction

3. Ministry of Public Works
a. Directorate for Water Supply Development
   – infrastructure, technical assistance, and
   standards for water supply provision
b. BPP SPAM – regulation of water resources
   and water supply enterprises
c. Directorate for Wastewater– infrastructure,
   technical assistance, and standards for sani-
   tation and wastewater services
d. Respective sub-directorates for planning and
   programming under the sector directorates
   (a and b above)

4. Ministry of Health, Directorate for Environ-
   mental Health – rural water supply, drinking
   water quality standards; rural sanitation, pro-
   motion and hygiene; urban integrated cities
   development (healthy cities)




26 | Financing Study Report
                                        Annex 2.
                                   WSS Financing Study
                        List of Government Counterparts Consulted

                 Name                                      Directorate
Bappenas
Basah Hernowo                            Human Settlements
Oswar Mungkasa                           Human Settlements
Nugroho Tri Utomo                        Human Settlements
Maraita Listyasari                       Human Settlements
Rahmat SD                                AMPL
Andre S Kuncoroyekti                     AMPL


Ministry of Finance
Setya Budi                               DJAPK
Baharuddin Abubakar                      DJAPK
Made Arya Wijaya                         Direktorat Anggaran I
Sambas Mulyana                           Direktorat Anggaran II
Wawan Sunarjo                            Direktorat Anggaran II
Teguh Widyono                            Pengelolaan Perusahaan Pinjaman
Siddik Budiman                           Pengelolaan Perusahaan Pinjaman
Arlen Pakpahan                           Bapekki
Kasman Saragito                          Bapekki
Herry P.                                 Bapekki
Wahyu W.                                 Bapekki
Fadliya                                  Bapekki
Denny Kurniawan                          Bapekki
Kadjatmiko                               Anggaran II
Catur                                    Anggaran II
Wendy Julianti                           Anggaran II


Ministry of Health
Wan Alkadri                              Dir. Penyehatan & Lingkungan
Ismail Malik                             Dit. Environmental & Health
Nugroho                                  Dit. Environmental & Health
Mudjiharto                               Dit. Environmental & Health
Djoko Wartono                            CPMU – CWSH
Endang S.                                Food Sanitation
Asep Suryakusumah                        Food Sanitation
Wahanudin                                Safety of waste
Bambang Hermawan                         WSLIC-2
Imam Syahbandi                           WSLIC-2
Mike Ponsonby                            WSLIC-2




                                                                           Financing Study Report |   27
                           Name                             Directorate
         Minstry of Public Works
         Poedjastanto
         Susmono
         Noerhadi
         Handy Legowo                     DJCK, Dep PU
         Bambang Purwanto                 DJCK,Dep.PU
         Siswantoro                       Ditjen PMD
         Dian Suci H.                     Dir.Pengembangan Air Minum, DJCK, Public Works
         Michael Oscar K                  Dit.PAM, DJCK, Public Works
         Suryanto
         Luky R.A.
         Deka Paranoan                    Dit. PLP-DJCK
         Hotman F Pandiangan              Dit. PLP-DJCK
         Dian Suci H.                     Dir.Pengembangan Air Minum, DJCK, Public Works
         Agus Ahyar                       Dit Pam


         Ministry of Environment
         Mohammad Helmy                   KLH
         Iim Ibrahim                      KLH
         Zulkarnain


         Department of Local Government
         Helda Nusi                       Bangda
         Rheidda Pramudhy
         Eko Subowo                       BAKD
         Sutirto                          BAKD




28 | Financing Study Report
                                          Annex 3.
               List of WASPOLA Participating Local Governments and Key Data



          Province/District                             Population
                                         2002              2003               2005
West Sumatera Province                    4,456,816         4,528,242          4,578,474
Sawah Lunto / Sijunjung                     181,365           185,845                   -
Tanah Datar                                 333,610           339,216           333,600
Payakumbuh City                             102,065           104,377           104,784
Solok                                       454,914           333,188                   -


Bangka Belitung Province                    976,031         1,012,655          1,060,965
South Bangka                                143,909           147,039           153,416
West Bangka                                 134,652           140,323           146,408
Pangkalpinang City                          137,582           141,556           155,036


Banten Province                           8,956,229         9,083,144          9,352,300
Pandeglang                                1,082,012         1,100,911          1,116,000
Lebak                                     1,128,924         1,156,433          1,176,802


Central Java Province                    32,052,840        32,397,431         32,397,432
Kebumen                                   1,193,978         1,203,315          1,369,961
Grobogan                                  1,353,688         1,360,908                   -
Pekalongan                                  821,870           844,215                   -


West Nusa Tenggara Province               4,005,360         4,076,040          4,053,674
West Lombok                                       -           724,491           724,491
East Lombok                                       -         1,027,805          1,044,673
Sumbawa                                           -           469,162           390,665


South Sulawesi Province                   7,280,351         7,379,370                   -
Selayar                                     109,415           111,458           107,706
Takalar                                     240,578           244,582           246,929
Pangkajene Kepulauan                        275,151           277,223           285,172


Gorontalo Province                          881,057           896,004                   -
Gorontalo                                         -           536,354                   -
Bone Bolango                                      -                  -                  -
Pohu Wato                                         -                  -          106,865




                                                                          Financing Study Report |   29
            Province/District                     GRDP at Constant Price
                                      2002                 2003                   2005

  West Sumatera Province         65,593,949,750,000    24,334,842,080,000    25,640,806,330,000
  Sawah Lunto / Sijunjung         2,002,962,350,000                     -                     -
  Tanah Datar                     4,467,397,320,000      587,605,410,000       618,009,430,000
  Payakumbuh City                 1,523,295,010,000      576,841,680,000       609,222,960,000
  Solok                           3,813,623,520,000     1,441,309,800,000     1,520,991,380,000


  Bangka Belitung Province       17,886,890,000,000     6,727,117,000,000     7,010,018,000,000
  South Bangka                    1,037,474,000,000                     -                     -
  West Bangka                     2,137,070,000,000                     -                     -
  Pangkalpinang City              2,257,682,000,000      810,668,000,000       847,520,000,000


  Banten Province               141,437,188,000,000                     -                     -
  Pandeglang                      8,385,712,730,000     1,319,909,540,000     1,398,784,320,000
  Lebak                           8,006,454,000,000     1,154,839,000,000     1,200,820,000,000


  Central Java Province         365,317,140,090,000   129,166,462,450,000   135,789,872,310,000
  Kebumen                         5,632,322,370,000     2,099,743,130,000     2,141,060,040,000
  Grobogan                        5,470,185,090,000     2,115,140,050,000     2,190,405,940,000
  Pekalongan                      6,448,453,090,000     2,406,190,610,000     2,504,933,380,000


  West Nusa Tenggara Province    40,357,587,000,000                     -                     -
  West Lombok                     2,138,560,390,000                     -                     -
  East Lombok                     2,541,943,330,000                     -                     -
  Sumbawa                         6,299,910,040,000                     -                     -


  South Sulawesi Province        91,365,395,000,000    35,426,050,000,000    37,266,969,000,000
  Selayar                          839,814,000,000       303,577,000,000       317,241,000,000
  Takalar                         1,626,961,000,000      621,242,000,000       651,678,000,000
  Pangkajene Kepulauan            4,082,358,000,000     1,656,406,000,000     1,758,994,000,000


  Gorontalo Province              5,276,787,000,000                     -                     -
  Gorontalo                        935,402,000,000                      -                     -
  Bone Bolango                     339,009.390,000                      -                     -
  Pohu Wato                        410,163,000,000                      -                     -




30 | Financing Study Report
Appendices




             Financing Study Report |   31
                                                  Table 16.
                       Total Local Budget Allocations for Water Supply and Sanitation

                                                       Total Expediture (budget) on WSS
          No.              Province/District
                                                       2003             2004              2005

         10000     West Sumatera Province            896,809,000     2,192,759,000    3,940,326,200
         11000     Sawah Lunto / Sijunjung           680,000,000      976,292,500     2,461,120,100
         12000     Tanah Datar                       871,037,000      198,951,532       819.890,000
         13000     Payakumbuh City                  2,769,676,411    4,265,571,723    2,881,325,830
         14000     Solok                            1,579,148,500    2,425,131,400      894,788,100


         20000     Bangka Belitung Province                    0     2,730,000,000                0
         21000     South Bangka                                0      180,000,000     3,575,580,000
         22000     West Bangka                                 0                0       150,000,000
         23000     Pangkalpinang City               7,001,395,000    5,769,000,000    4,980,479,000


         30000     Banten Province                   284,900,000      712,500,000     3,230,525,000
         31000     Pandeglang                        398,750,000      680,883,000     1,020,485,000
         32000     Lebak                            1,174,500,000    1,533,000,000    3,418,044,400


         40000     Central Java Province            3,376,336,000     920,000,000     3,006,920,000
         41000     Kebumen                          1,492,167,000     814,978,000       2,036,200,00
         42000     Grobogan                          955,000,000     2,322,424,000    2,862,000,000
         43000     Pekalongan                        499,000,000      240,000,000     1,725,000,000


         50000     West Nusa Tenggara Province      1,796,098,000    5,056,345,167    4,484,900,930
         51000     West Lombok                      1,274,228,000    1,580,186,593      925,439,000
         52000     East Lombok                      2,628,083,000    1,539,225,200    1,576,970,250
         53000     Sumbawa                          3,112,771,870               0                 0


         60000     South Sulawesi Province         10,558,265,000    4,661,350,000   10,805,711,105
         61000     Selayar                          2,442,400,000    3,226,354,000    2,517,016,000
         62000     Takalar                          1,153,003,250     818,819,000       989,971,000
         63000     Pangkajene Kepulauan             5,670,009,000    3,624,020,000    6,147,510,000


         70000     Gorontalo Province               1,050,030,000    1,732,000,000    3,065,360,000
         71000     Gorontalo                         425,140,000       10,000,000       764,800,000
         72000     Bone Bolango                                0                0     1,155,650,000
         73000     Pohu Wato                                   0    14,144,062,500    4,610,058,500
                   TOTAL                           52,068,747,101   62,353,853,115   74,046,270,000

       Source: DASK Province/Kab/Kota 2003-2005




32 | Financing Study Report
                                                    Table 17. Local Budget Allocation for Water Supply and Environmental Sanitation Sector – Capital and Operational Expenditure
                                                      COMPARISON OF LOCAL BUDGET (BUDGETED) ALLOCATION FOR WSS. For provinces and districts of the WASPOLA area. Cumulative period of 2003 - 2005
                                                                                                                            Expenditure (budgeted) for WSES

                             Province / District                                            Capital Expenditure                                                                         Operational Expenditure

                                                      Water         Waste Water       Solid Waste       Drainage         Others        Total Capital       Personnel       Goods & Services    Traveling       Maintenance            Total
                                                                                                                                           Exp                                                                                   Operational Exp
                           West Sumatra              3,656,623,00                 0              0     1,631,095,000    190,000,000     5,477,718,000       166,355,000        756,644,700     564,052,000         65,124,500     1,552,176,200
                           Bangka Belitung            50,000,000                  0              0     2,480,000,000              0     2,530,000,000        12,500,000        187,500,000                 0                 0      200,000,000
                           Banten                   3,515,425,000                 0              0                 0              0     3,515,425,000        55,500,000        654,100,000        3,200,000                  0      712,500,000
                           Central Java             3,293,070,000     705,665,000                0     1,078,000,000              0     5,076,737,000        83,850,000       1,843,226,000    299,445,000                   0    2,226,521,000
                           West Nusa Tenggara       6,369,572,300    1,900,000,000               0                 0              0     8,269,572,300       119,200,460        898,001,940       49,820,000    2,000,749,397       3,067,711,797
                           South Sulawesi          10,735,066,105    7,852,100,000               0     1,630,000,000   2,333,350,000   22,550,536,105       430,100,000       2,689,773,000    219,940,000        134,977,000     3,474,790,000
                           Gorontalo                3,582,750,000    1,650,000,000               0                 0     10,100,000     5,242,850,000        36,180,000         28,500,000       39,860,000       500,000,000       604,540,000
                           Total province          31,202,526,405   12,107,765,000               0     6,819,095,000   2,533,450,000   52,662,836,405       903,385,460       7,057,745,640   1,176,317,000    2,700,850,897     11,338,298,997
                           Payakumbuh City          1,584,892,700      49,800,000      296,540,975     4,744,763,530   1,807,384,813    8,483,382,018       177,495,336        458,329,305       26,560,000       770,807,305     1,433,191,946
                           Pangkalpinang City       1,192,500,000    1,744,100,000     245,000,000    14,564,659,000              0    17,746,259,000         4,615,000                  0                 0                 0        4,615,000
                           Total City               2,777,392,700    1,793,900,000     541,540,975    19,309,422,530   1,807,384,813   26,229,641,018       182,110,336        458,429,305       26,560,000       770,807,305     1,437,806,946
                           Sawah Lunto/Sijunjung    2,374,972,900      50,000,000       2,640,0000     1,677,850,000              0     4,105,462,900                  0         6,449,700        5,500,000                  0       11,949,700
                           Tanah Datar               843,796,032       42,000.000                0       880,300,000              0     1,766,096,032        46,564,492         41,026,300       18,982,942        17,208,900       123,782,500
                           Solok                    4,166,988,200                 0              0        70,000,000              0     4,236,988,200        33,540,000        491,306,300      111,983,500        25,250,000       662,079,800
                           South Bangka              399,600,000                  0              0     3,155,980,000              0     3,555,580,000                  0                 0                 0      200,000,000       200,000,000
                           West Bangka                         0                  0              0                 0              0                    0      3,375,000          4,125,000                 0      142,500,000       150,000,000
                           Pandeglang               1,695,554500                  0              0                 0              0     1,695,554,500        62,095,000        201,506,250       88,451,250        52,511,000       404,563,500
                           Lebak                    4,329,663,000     807,500,000      142,500,000                 0     33,000,000     5,312,663,000       122,981,000        121,141,400       93,825,000       474,934,000       812,881,400
                           Kebumen                  2,567,746,750                 0              0     1,622,442,500              0     4,190,189,250       31,7895,000         92,852,750       28,518,000                  0      153,155,750
                           Grobogan                 2,205,000,000                 0    222,000,000     2,275,000,000   1,047,500,000    5,749,500,000        12,495,000        121,141 ,400      18,300,000       237,331,548       389,924,000
                           Pekalongan               1,728,740,000      47,000,000                0       635,751,000              0     2,411,491,000        11,548,300         36,107,200        4,853,500                  0       52,509,000
                           West Lombok              1,678,225,152     480,000,000      123,635,000       405,297,420              0     2,687,157,572       201,144,800        425,816,617       65,511,000       400,223,674     1,092,696,091
                           East Lombok              2,457,970,800     878,363,000      225,000,000     1,028,490,000              0     4,589,823,800       362,725,000        482,680,650       69,250,000       239,799,000     1,154,454,650
                           Sumbawa                             0                  0              0     2,237,640,120    532,000,000     2,769,640,120        95,217,000        189,374,750       29,540,000        29,000,000       343,131,750
                           Selayar                  5,014,754,000      40,000,000                0     2,329,016,000              0     7,383,770,000                  0       782,000,000                 0                 0      782,000,000
                           Takalar                  1,144,110,000                 0      9,800,000       751,500,000              0     1,905,410,000        62,600,000        717,023,750      117,260,000       159,500,000     1,056,383,750
                           Pangkajene Kepulauan    10,204,148,000     100,000,000       93,000,000     1,259,559,000              0    11,656,707,000       126,145,000        622,385,000       44,270,000    2,992,032,000      3,784,832,000
                           Gorontalo                 848,000,000       57,500,000      192,500,000                 0              0     1,098,000,000        20,450,000         75,250,000        6,240,000                  0      101,940,000
                           Bone Bolango             1,155,850,000                 0              0                 0              0     1,155,850,000                  0                 0                 0                 0                0
                           Pohu Wato                3,727,000,000                 0              0     14,94,755,000              0    18,721,755,000                  0        32,366,000                 0                 0       32,366,000
                           Total Kabupatens        46,542,119,334    2,502,363,000    1,011,075,000   33,323,581,040   1,612,500,000   84,991,638,374      1,192,665,592      4,443,208,985    702,485,192     4,970,290,122     11,308,649,891




Financing Study Report |
33
                                                                     Table 18. Local Budget Allocation for WSS - Physical and Non-Physical Activities
                                                 COMPARISON OF LOCAL BUDGET ALLOCATION FOR WSS. Among provinces and districts of the WASPOLA area. Cumulative for Period 2003 - 2005



                                Province & District                                         Physical Project                                                             Non Physical Projects

                                                            Water         Waste Water        Solid Waste          Drainage         Sub Total        Tehnical        Project Support   Socialization     Sub Total
                                                                                                                                                   Assistance       & Maintenance      of Policies
                              West Sumatra Province       3,819,188,000                 0               0        1,975,000,000    5,794,1880,000    404,829,400        512,690,000     319,186,800     1,235,706,200




34 | Financing Study Report
                              Sawah Lunto/Sijunjung       2,386,922,600      50,000,000         2,640,000        1,677,850,000     4,117,412,600                0                o                0                 0
                              Tanah Datar                  862,951,532       45,000,000                 0         914,537,000      1,822,488,532                0       67,390,000                0      67,390,000
                              Solok                       1,630,319,100      53,545,105       397,423,411        6,714,004,343     8,795,331,959    156,494,800        964,747,205                0    1,121,242,005
                              Bangka Belitung Province    4,336,215,200                 0               0           70,000,000     4,406,215,200                0      492,852,800                0     492,852,800
                              South Bangka                  50,000,000                  0               0        2,480,000,000     2,530,000,000    200,000,000                  0                0     200,000,000
                              West Bangka                  399,600,000                  0               0        3,555,580,000     3,555.580,000                0      200,000,000                0     200,000,000
                              Pangkalpinang City                     0                  0               0                    0                 0                0      150,000,000                0     150,000,000
                              Banten Province             1,192,500,000     644,100,000                 0       15,016,580,000    15,016,580,000                0    2,734,294,000                0    2,734,294,000
                              Pandeglang                  3,515,425,000                 0               0        3,515,425,000     3,515,425,000    712,500,000                  0                0     712,500,000
                              Lebak                       2,100,118,000                 0               0        2,100,118,000     2,100,118,000                0                0                0                 0
                              Central Java Province       4,601,281,000     901,465,500       150,000.000        5,652,767,000     5,652,767,400                0      472,777,000                0     472,777,000
                              Kebumen                     2,887,494,000     858,000,000       200,000,000        5,075,494,000     5,075,494,000   1,146,382,000     1,031,880,000      49,500,000     2,227,762,000
                              Grobogan                    2,597,452,000                 0               0        4,042,742,000     4,042,742,000     24,478,000        276,125,000                0     300,603,000
                              Pekalongan                  3,255,000,000      27,500,000       242,000,000        4,899,500,000     4,899,500,000    105,000,000      1,134,924,000                0    1,239,924,000
                              West Nusa Tenggara          1,738,000,000      50,000,000                 0        2,464,000,000     2,464,000,000                0                0                0                 0
                              Province                    7,947,157,200    1,971,937,500                0        9,919,094,000     9,919,094,700                0    1,418,249,397                0    1,418,249,397
                              West Lombok                 1,876,600,919     512,406,200       529,301,290       2,922,308,,409     2,922,308,409                0      857,545,254                0     857,545,254
                              East Lombok                 2,671,970,000     928,781,000       549,667,000        5,439,888,000     5,439,888,000     72,630,000        231,760,450                0     304,390,450
                              Sumbawa                      187,234,000                  0               0        3,112,771,870     3,112,177,870                0                0                0                 0
                              South Sulawesi Province    11,745,846,105    9,602,480,000                0       25,875,326,105    25,875,326,105                0                0     150,000,000      150,000,000
                              Selayar                     5,014,754,000      40,000,000                 0        7,383,770,000     7,383,770,000    571,000,000        211,000,000                0     782,000,000
                              Takalar                     1,499,479,000                 0     126,343,000        2,907,001,000     2,907,001,000                0       54,792,750                0      54,792,750
                              Pangkajene Kepulauan       10,618,148,000     180,400,000        98,000,000       12,221,487,000    12,221,487,000                0    3,220,052,000                0    3,220,052,000
                              Gorontalo Province          2,777,750,000    2,184,000,000                0        4,961,750,000     4,961,750,000    868,280,000         17,360,000                0     885,640,000
                              Gorontalo                    754,800,000       57,500,000       207,070,000        1,019,370,000     1,019,370,000    112,070,000         68,500,000                0     180,570,000
                              Bone Bolango                 945,850,000                  0               0       15,940,605,000    15,940,605,000                0      210,000,000                0     210,000,000
                              Pohu Wato                   3,727,000,000                 0               0        3,727,000,000     3,727,000,000                0       32,366,000                0      32,366,000
                              Total 7 Province           32,742,860,305   14,616,417,500      200,000,000       57,671,277,805    57,671,277,805   3,330,991,400     2,980,179,397     518,686,800     6,829,857,597
                              Total Kab/Kota             52,396,195,351    3,494,718,705    2,302,444,701      111.546,936,970   111,546,936,970   1,041,672,800    11,379,126,459                0   12,420,799,259
                              TOTAL                      85,139,055,656   18,111,136,205    2,502,444,701      169,218,214,775   189,218,214,755   4,372,664,200    14,359,305,856     518,686,800    19,250,656,856

                              DASK Provinci/Kab/Kota 2003-2005
                                                                       Table 19. Local Budget - Total Revenues and Expediture

                                                                              Total Revenue (budgeted)                          Total Expediture (budgeted)
                             Kode      Province & District
                                                                       2003                 2004                2005               2003                 2004               2005
                            10000    West Sumatra Province         494,729,300,000      563,950,350,000    738,641,240,000     304,738,320,000     636,818,370,000     831,197,740,000
                            11000    Sawah Lunto/Sijunjung         217,284,940,000      228,062,520,000    159,897,860,000     260,355,360,000     263,199,540,000     193,954,250,000
                            12000    Tanah Datar                   220,000,900,000      221,519,800,000    237,635,360,000     244,770,770,000     258,121,920,000     265,203,550,000
                            13000    Solok                         180,073,960,000      165,848,320,000    170,153,430,000     180,073,960,000     185,393,740,000     193,084,680,000
                            14000    Bangka Belitung Province      243,769,410,000      258,412,870,000    209,388,179,470     273,369,700,000     287,412,870,000     232,846,029,159
                            20000    South Bangka                  240,350,270,000      271,930,790,000    322,483,760,000     257,716,740,000     318,616,670,000     382,971,870,000
                            21000    West Bangka                                  -      73,161,629,472     98,561,660,000                    -     66,786,259,352     124,333,340,000
                            22000    Pangkalpinang City                           -      70,483,190,000     86,906,940,000                    -     71,997,110,000     108,040,100,000
                            23000    Banten Province               129,824,730,000      141,765,840,000    151,091,300,000     141,756,780,000     160,231,590,000     165,155,480,000
                            30000    Pandeglang                  1,075,305,980,000    1,225,373,920,000   1,452,277,790,000   1,123,305,980,000   1,263,930,140,000   1,598,988,210,000
                            31000    Lebak                         326,584,150,000      349,877,110,000    370,373,170,000     326,624,160,000     352,608,520,000     372,909,770,000
                            32000    Central Java Province         305,113,010,000      322,857,200,000    362,980,710,000     306,780,310,000     324,834,710,000     368,270,460,000
                            40000    Kebumen                     2,190,129,810,000    2,425,881,000,000   2,897,938,080,000   2,358,271,500,000   2,373,142,800,000   2,682,191,550,000
                            41000    Grobogan                      388,670,610,000      417,756,790,000    427,381,260,000     395,925,090,000     443,210,990,000     453,210,270,000
                            42000    Pekalongan                    384,860,760,000    439,831,040,00069    441,428,430,000     287,711,290,000     465,442,480,000     287,942,540,000
                            43000    West Nusa Tenggara            280,477,910,000      299,570,860,000    321,446,930,000     290,283,090,000     315,376,040,000     326,252,120,000
                            50000    Province                      403,285,460,000      434,453,780,000    475,998,870,000     403,285,460,000     441,204,940,000     514,199,780,000
                            51000    West Lombok                   296,922,290,000      297,301,610,000    324,625,580,000     296,922,280,000     303,395,530,000     330,206,240,000
                            52000    East Lombok                   358,003,490,000      378,903,860,000    405,490,280,000     365,374,930,000     389,468,830,000     404,437,700,000
                            53000    Sumbawa                       304,462,530,000      318,767,480,000    249,223,340,000     317,278,440,000     322,328,730,000     270,084,360,000
                            60000    South Sulawesi Province       749,625,360,000      826,277,420,000   1,162,637,940,000    752,385,520,000     864,042,190,000    1,125,546,540,000
                            61000    Selayar                       137,820,230,000      146,678,610,000    160,006,870,000     118,659,280,000     150,213,950,000     164,511,070,000
                            62000    Takalar                       176,341,050,000      179,591,180,000    191,581,390,000     185,307,850,000     176,072,830,000     186,610,280,000
                            63000    Pangkajene Kepulauan          204,119,010,000      213,896,940,000    234,647,530,000     203,324,050,000     221,583,550,000     245,560,730,000
                            70000    Gorontalo Province            221,837,120,000      254,143,610,000    261,220,000,000     206,332,170,000     255,438,930,000     131,694,840,000
                            71000    Gorontalo                     252,980,040,000      229,367,950,000    240,159,610,000     252,703,620,000     355,131,900,000     261,789,080,000
                            72000    Bone Bolango                                 -      91,957,488,304    120,335.380,000                    -     91,957,488,304     115,359,260,000
                            73000    Pohu Wato                                    -     117,050,579,941    128,411,661,562                    -    118,532,634,627     127,739,396,839
                                     Total 7 Province            5,375,263,300,000    6,002,010,870,000   7,311,197,680,000   5,406,035,690,000   6,153,194,040,000   7.266,790,530,000
                                     Total Kab/Kota              4,407,273,020,000    4,962,662,867,717   5,091,736,771,031   4,547,220,960,000   5,323,301,212,283   5,197,500,705,998

                           Source: Ministry of Finance (DJAPK - Website)




Financing Study Report |
35
                                                                Figure 8.
                                        Districts Ranked by Total WSES Investment (2003 - 2005)
              Districts
            Pohu Wato

 Pangkajene Kepulauan

                Selayar

             Grobogan
                                                                                                                                                                                2003
                 Lebak
                                                                                                                                                                                2004
          East Lombok
                                                                                                                                                                                2005
                 Solok

             Kebumen

Sawah Lunto / Sijunjung

         West Lombok

         South Bangka

             Sumbawa

                Takalar

           Pekalongan

           Pandeglang

           Tanah Datar

             Gorontalo

         Bone Bolango

          West Bangka

                          0             2            4            6            8            10            12            14            16            18            20

                                                                                      Billion IDR




                                                                 Figure 9.
                                            District Ranked by WSES Average Per K (2003 - 2005)


                     Pohu Wato

                          Selayar

         Pangkajene Kepulauan

                  South Bangka

                           Solok

        Sawah Lunto / Sijunjung

                          Takalar

                    Tanah Datar

                           Lebak

                  West Lombok

                   East Lombok

                      Grobogan

                      Kebumen

                    Pandeglang

                    Pekalongan

                  West Bangka

                      Gorontalo

                      Sumbawa

                                    0        5,000       10,000       15,000       20,000        25,000        30,000        35,000        40,000        45,000        50,000

                                                                                                    IDR




36 | Financing Study Report
                                                                  Figure 10.
                                               Provinces Ranked by WSES Investment (2003-2005)


                                    South Sulawesi Province



                      West Nusantara Tenggara Province



                                       Cental Java Province
                                                                                                                             2003
               Provinces




                                    West Sumatera Province                                                                   2004

                                                                                                                             2005

                                         Gorontalo Province



                                            Banten Province



                                   Bangka Belitung Province


                                                              0      5    10     15            20      25      30
                                                                                Billion IDR




                                                                      Figure 11.
                                                       Provinces Ranked by Ave Per K (2003-2005)

                             Gorontalo Province



               South Sulawesi Province



           West Nusa Tenggara Province
Povinces




              Bangka Belitung Province



               West Sumatera Province



                                Banten Province



                           Central Java Province


                                                   0          200   400   600    800          1,000   1,200   1,400        1,600    1,800

                                                                                               IDR




                                                                                                                      Financing Study Report |   37
                                                                Table 20. Ministry of Public Works WSES Allocation by Type

                                                                                                         2003
                                 Class of
                                                        Total             Capital          Non Capital                        Detailed Non Capital
                                 Spending
                                                                                                                     TA               OM               SC
                              Total Spending       394,669,619,000     226,009,550,000     168,660,069,000      156,765,716,000    10,960,366,000     933,987,000
                                 Water             262,599,214,000     120,034,842,000     142,564,373,000      131,759,007,000    10,030,366,000     775,000,000
                                 Sanitation         67,142,151,000      59,282,951,000       7,859,200,000        6,820,213,000       930,000,000     108,987,000




38 | Financing Study Report
                                 Solid Waste        24,749,908,000      13,117,671,000      11,628,237,000       11,578,237,000                 0      50,000,000
                                 Drainage           40,182,345,000      33,574,086,000       6,608,259,000        6,608,259,000                 0               0


                                                                                                         2004
                                 Class of
                                                        Total             Capital          Non Capital                        Detailed Non Capital
                                 Spending
                                                                                                                     TA               OM               SC
                              Total Spending       508,817,473,000     465,923,263,000      42,894,210,000       27,012,187,000    11,205,411,000    4,676,612,000
                                 Water             404,964,646,000     378,745,234,000      26,219,412,000       17,858,480,000     4,786,798,000    5,574,634,000
                                 Sanitation         45,656,821,000      42,311,821,000       3,345,000,000        3,000,000,000       345,000,000                0
                                 Solid Waste        12,637,544,000       7,940,137,000       4,697,405,000        3,045,427,000       600,000,000    1,051,978,000
                                 Drainage           45,558,462,000      36,926,069,000       8,632,393,000        3,108,280,000     5,474,113,000       50,000,000


                                                                                                         2005
                                 Class of
                                                        Total             Capital          Non Capital                        Detailed Non Capital
                                 Spending
                                                                                                                     TA               OM               SC
                              Total Spending       370,356,930,000     322,113,604,000      48,243,326,000       37,687,610,000     4,433,842,000    2,121,884,000
                                 Water             241,667,385,000     219,383,863,000      22,283,522,000       17,493,546,000     3,864,034,000      925,941,000
                                 Sanitation         26,118,591,000      16,151,738,000       9,966,853,000        9,056,050,000       610,803,000      300,000,000
                                 Solid Waste        36,324,735,000      32,985,432,000       3,339,303,000        3,173,361,000                 0      162,942,000
                                 Drainage           66,246,219,000      53,592,571,000      12,653,648,000        7,964,653,000     3,964,995,000      730,000,000


                              *TA   - Tehnical and Planning Activities
                              OM    -Operations and Maintenance
                              SC    -Socialization, Communications and Capacity Building

								
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